Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is the primary aim of a performance appraisal?

1. Conduct team bonding activities

2. Reward employees financially

3. Review past performance and assess future potential

4. Organize employee training sessions

The correct answer is: Review past performance and assess future potential

The primary aim of a performance appraisal is to review past performance and assess future potential. This process involves evaluating an employee's work over a specific period, typically annually or bi-annually, looking at their achievements, strengths, weaknesses, and overall contributions to the organization. By conducting a thorough assessment, management can identify areas where an employee excels and where they may need improvement or further development. Additionally, performance appraisals help in making informed decisions regarding promotions, training needs, and career development opportunities for employees. They serve as a foundation for setting future performance goals, thereby linking an employee's professional growth with the organization's objectives. While conducting team bonding activities, rewarding employees financially, and organizing training sessions can all be important aspects of employee management and development, these activities are generally considered secondary to the primary function of performance appraisal. They may stem from the insights gained during appraisals but do not encapsulate the main goal of reviewing and fostering employee performance and potential.