The document discusses potential appraisal, which evaluates an employee's qualities that can be developed to determine their potential for future higher roles. It explains that in Indian organizations, promotions are often based only on past performance, not potential. A potential appraisal system aims to identify employees' potential for advancement by assessing them on qualities required for higher positions through ratings, tests, and performance reviews. This helps management make promotion decisions and develop managerial talent. The document outlines steps for an effective potential appraisal system and how it can be linked to training, job rotation, and other systems. However, it notes that potential appraisal is not widely used in India due to high employee mobility and the time commitment required.

2.  What do you mean by Potential
Appraisal?
POTENTIALPOTENTIAL APPRAISALAPPRAISAL
Qualities that exist Evaluation
and can be developed
• Beyond the Present Role.

3. Overview of POTENTIAL
APPRAISAL
 How Indian organisations give promotionsHow Indian organisations give promotions
to their people?to their people?
 What is the nature of the IndianWhat is the nature of the Indian
organisation?organisation?
 At every designation each individual has toAt every designation each individual has to
perform different roles, responsibilities andperform different roles, responsibilities and
functions.functions.

4. Promotions A Big Problem!Promotions A Big Problem!
 Promotions are given on the basis of pastPromotions are given on the basis of past
performance.performance.
- An assumption is being made that- An assumption is being made that
competence in performing the presentcompetence in performing the present
role is sufficient indicator ofrole is sufficient indicator of
competence to perform a higher andcompetence to perform a higher and
different role in the organisation.different role in the organisation.
 Seniority is given more priority thenSeniority is given more priority then
Younger Talents.Younger Talents.

5. DefinitionDefinition:-:-
Potential appraisal is concerned with identifyingPotential appraisal is concerned with identifying
the potential of an employee for futurethe potential of an employee for future
development and promotion in the organisationdevelopment and promotion in the organisation..
ObjectiveObjective:-:-
To identify the potential of a given employee toTo identify the potential of a given employee to
occupy higher positions in the organisationaloccupy higher positions in the organisational
hierarchy and undertake higher responsibility.hierarchy and undertake higher responsibility.

6. Why Potential Appraisal System is
needed?
 It attempts to generateIt attempts to generate
- Data about employees- Data about employees
- Their potential for occupying higher- Their potential for occupying higher
positions from a variety of sources and helpspositions from a variety of sources and helps
the top management to make decisions.the top management to make decisions.
 The organisation also has the responsibility forThe organisation also has the responsibility for
developing the managerial talent so this systemdeveloping the managerial talent so this system
also helps the management in identifyingalso helps the management in identifying
employees whose capabilities can beemployees whose capabilities can be
developed.developed.

7. Steps to be followed for a good
potential appraisal system
 Role DescriptionsRole Descriptions
 Qualities required to perform the rolesQualities required to perform the roles
 Indicator of QualitiesIndicator of Qualities
- Rating by Others- Rating by Others
- Psychological Tests- Psychological Tests
- Simulation Games and Exercises- Simulation Games and Exercises
- Performance Appraisal Records- Performance Appraisal Records
 Organising the SystemOrganising the System
 Feedback on Potential Appraisal for Career Dev.Feedback on Potential Appraisal for Career Dev.

8. Linkages with Other System
 Feedback and CounselingFeedback and Counseling
 TrainingTraining
 Job RotationJob Rotation
 Data StorageData Storage
 Manpower PlanningManpower Planning

9. Current Status and Experience
 Indian Organisations are yet to focus theirIndian Organisations are yet to focus their
attention on potential appraisal.attention on potential appraisal.
 With Growth Opportunities all around, theirWith Growth Opportunities all around, their
has been high mobility among executives.has been high mobility among executives.
Due to this Mobility, most organisationsDue to this Mobility, most organisations
are not willing to invest their time andare not willing to invest their time and
effort in identifying and developing theeffort in identifying and developing the
potential of managers.potential of managers.
 Potential appraisal is time consumingPotential appraisal is time consuming
activity.activity.

10. Examples:
 CROMPTONCROMPTON
GREAVES LTD.GREAVES LTD.
 BPLBPL
 Dr. REDDYDr. REDDY