Potential appraisal is used to identify an employee's hidden talents and skills to predict their future performance potential. It evaluates an employee's ability to assume higher positions. The objectives are to motivate employees, inform them of career prospects, update training, and help succession planning. Potential appraisal considers an employee's technical skills, managerial capabilities, behavioral traits, and conceptual abilities through methods like peer reviews, psychological tests, and performance records. The goal is to help employees understand their strengths and weaknesses to aid in their development.

1. Potential Appraisal
• Introduction
The potential appraisal refers to the appraisal i.e.
identification of the hidden talents and skills of a person.
The person might or might not be aware of them.
Potential appraisal is a future-oriented appraisal whose
main objective is to identify and evaluate the potential of
the employees to assume higher positions and
responsibilities in the organizational hierarchy. Many
organizations consider and use PA as a part of the
performance appraisal processes.

2. Definitions
• Potential appraisal is a process of determining
an employee’ s strengths and weaknesses with
a view to use this as a predictor of his future
performance.
• Potential appraisal is a future oriented appraisal
aimed to identify and evaluate the potential of
the employees to assume higher positions and
responsibilities in the organizational hierarchy

3. Need For Appraisal
• Create competitive environment foe better
performance
• Infuse a healthy organizational culture
• Boosting the morale and motivation of the
employees
• Attracting and retaining best talent

4. Purpose or need of potential
appraisal
• To inform employees of their future prospects
• To update training and recruitment activities
• To advise employees about the work to be done
to enhance their career opportunities
• To enable the organization to draft a
management succession programme
• Motivate the employees to further develop their
skills and competencies

5. CHARACTERISTICS
• Process of identifying hidden skills and abilities
in a person
• The time for potential appraisal is not fixed
• It is future oriented process
• Part of performance appraisal
• It does not guarantee promotion

6. PARAMETERS OR INDICATORS OF
POTENTIAL
• Sense of reality
• Creative imagination
• Power of analysis
• Breadth of vision
• Leadership

7. STEPS AND REQUIREMENTS
1)Role description- A good potential
appraisal system would be based on
clarity of roles and functions associated
with the different roles in an organization.
The requirement is extensive job
description to be made available for each
job. These job descriptions should spell
out the various functions involved in
performing the job.

8. 2)QUALITY REQUIRED
A) Technical knowledge and skills
B) Managerial capabilities and qualities
C) Behavioral capabilities
D) Conceptual capabilities

9. INDICATORS OF QUALITIES
• Ratings by others
• Psychological test
• Simulation games and exercises
• Performance appraisal records

10. 3)ORGANIZING THE SYSTEM
• Once the functions , the qualities required to
perform these functions , indicators of these
qualities , and mechanism for generating these
indicators are clear , the organization is in a
sound position to establish and operate the
potential appraisal system.

11. FEEDBACK
• If the organization believes in the development
of human resources it should attempt to
generate a climate of openness. Such a climate
is required for helping the employees to
understand their strengths and weaknesses and
to create opportunities for development.

12. TECNIUQES OF POTENTIAL APPRAISAL
• Self appraisal-
Self appraisal form
* Name of employee
* Designation
* Department
* Reporting officer
* Responsibilities
* Accomplishments
* Goals for next appraisal period
* Area of improving
* Problems faced

13. • Solutions tried
• Measures taken for personal and professional
development
• Best and worst aspects of the job
• Is the superior supportive

14. FORM ALSO INCLUDE BEHAVIOURAL
PARAMETERS
• Communication skills
• Inter-personal skills
• Problem-solving
• Team work
• Adaptability/flexibility
• Decision making
• Leadership

15. • Peer appraisal
• Superior analysis
• MBO
• Psychological tests
• Management games
• Leadership exercises