Personnel development: performance appraisal can help reveal the causes of good and poor employee performance. It thus helps the employee to overcome his weakness and improve his strengths so as to enable him to achieve the desired performance.

Improve supervision: the existence of a regular appraisal system tends to make the supervisors more observant of their subordinates because they know that will be expected periodically to fill out rating forms and would be called upon to justify their estimates. These improve supervision.