Performance appraisal, by providing a dynamic link to employee recruitment, selection, training and development, career planning, compensation and benefits, safety and health and industrial relations, is a vital tool for strategy execution. It signals to managers and employees what is really important; it fixes accountability for behaviour and results; and it helps to improve performance.
This project will explain the knowledge about the performance appraisal. It can be used as a means of assessing potential for promotion, assisting people to perform better and indicating future training needs.
This project will help in studying the purpose of performance appraisal. Performance appraisal is a management program, not just an HR department responsibility. It can help in development of scientific basis for reward allocation, wage fixation, incentives. It serves as a mechanism for communication between superiors and subordinates.
This project will help in knowing the problems and hurdles faced by ineffective performance appraisal.  This research work comprise of both primary as well as secondary data.Objective of the Study:
This project aims at studying the system of performance appraisal and its effectiveness in an organization. Performance appraisal is the most significant and indispensable tool for the management as it provide useful information for decision making in area of promotion and compensation reviews.
Thus a broad objective of the study includes:
•    To know the present system of performance appraisal
•    To know the extent of effectiveness of the appraisal system
•    To identify and know the area for improvement system
Conclusion:
•    The promotions rule though defined need to be communicated to every employee before appraisal process is done and also justify the promotion as a result of the appraisal. That the promotion policy followed differs at different position and category. Uniformity has to be there in the implementation of promotion policy at all levels.
•    The process of performance appraisal followed in Dabur India Ltd. at the supervisory and above level IS to say not well but of satisfactory level. The employees do not rate it very good.
•    The appraisal outcome has to be used frequently for the purpose of reward on performing well together with the feedback on the performance. Also when performance goes down employee has to be given feedback and motivated to do better.
•    The organization at present doesn't lie career planning and career suggestion plans.
•    In Dabur India Ltd. feedback is being provided to the employee though on a few occasion.
•    Performance appraisal in Dabur India Ltd is done on an annual basis.
•    More emphasis on training and job rotation as remedial measures.
•    The mechanism of counseling pre-performance and post performance is not in practice at the organization in strict term. During the course of study suggestion came from the employee side for the need of counseling.
Suggestions:
•    Training the Appraiser: It is proposed that appraiser be trained for clear understanding of the system and its objective and also counseled to be honest, fair, just, unbiased in appraising the appraisal.
•    Factors/traits of evaluation: It is proposed that appraisal evaluated on above factors/traits be given suitable remark or justification for being given different quantitative grade.
•    Greater clarity has to be has to there in terms of job responsibility. This is possible when the appraisal is done on the basis of the description.
•    In the organization, performance appraisal is done on an annual basis which should be done Quarterly to make it more effective.
•    Consistency is demanded in the promotional policy. It should not change every year.
•    Monetary difference between two grades should not be large; it should be motivating in nature.
•    Performance appraisal system should be made more transparent and rationale.
•    Performance feedback: The performance feedback sessions should be improved which would results in increasing employee motivation to improve performance. The following could be incorporated.
•    Pin point the problem behaviors and make sure the employee is aware of it.
•    Make sure the employee understands the consequences of the problem behaviors. Get employee's commitment to change and make sure he cares about the change.
•    Assistance should be provided to improve poor performance. Make a realistic plan appropriate to the behavior and set a time frame for improvement.
•    To make sure to review performance time to time.
•    The other change which has to be incorporated at the supervisor and the level above are:
•    These should be listing down of task undertaken during the last one year and the result achieved.
•    In some areas of performance there should be self appraisal and more and more counseling so that employee improves upon weak area and understands what is expected of him/her at the organization level.
•    Based on the above an open appraisal system is suggested.