DECA Human Resources Management Complete Practice Test 2026

The main role of performance appraisal in Human Resource Management (HRM) is to evaluate and reward employee performance. Performance appraisals are systematic evaluations of employee performance over a specific period, measuring how well employees meet their job requirements and organizational goals.

This process serves multiple purposes: it provides managers with a structured method to assess the contributions of employees, identifies areas where employees excel or may need improvement, and fosters a clearer understanding of job expectations. Additionally, appraisals often inform decisions regarding promotions, raises, or the distribution of rewards, ultimately being a key driver in motivating employees and aligning their objectives with the organization's goals.

While performance appraisals may sometimes lead to the termination of underperforming employees, that is not their primary function. Recruitment of new employees is a separate process focused on attracting and hiring talent, and managing employee hours typically falls under workforce management rather than performance evaluation. Thus, the focus on evaluating and rewarding performance encapsulates the core purpose of performance appraisals in HRM.