Performance appraisal involves systematically evaluating an employee's job performance and potential for future roles. It is meant to identify training needs, provide feedback, and inform personnel decisions. There are various methods for conducting performance appraisals, including traditional methods like essays, rankings, and checklists as well as more modern approaches like management by objectives and 360-degree feedback. Both the process and tools used should be designed, communicated, and implemented carefully to ensure fair and meaningful evaluations.