Potential appraisal is the process of identifying and evaluating employees' hidden talents and skills for future roles within an organization. It aims to guide career development, create succession plans, and determine training needs through various techniques such as self-appraisals and psychological tests. The appraisal system involves clearly defined roles, rating mechanisms, and feedback to help employees understand their potential and the assessment results.

1. Steps of Potential appraisal
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2. Meaning of Potential Appraisal
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.
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3. Purpose of Potential Appraisal
To advise employees about their overall career development and future
prospects.
Help the organization to chalk out succession plans.
Motivate the employees to further develop their skills and
competencies.
To identify the training needs.
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4. Techniques of Potential Appraisal
Self – appraisals
Peer appraisals
Superior appraisals
MBO
Psychological and psychometric tests
Management games like role playing
Leadership exercises etc.
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5. Steps of Potential Appraisal System
Role Descriptions
Qualities needed to perform the roles
Rating mechanisms
Organizing the system
Feedback
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6. Explanation!!
Role Descriptions: Organizational roles and functions must be defined
clearly. To this end, job descriptions must be prepared for each job.
Qualities needed to perform the roles: Based on job descriptions, the
roles to be played by people must be prepared (i.e., technical,
managerial jobs and behavioral dimensions).
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7. Rating mechanisms: Besides listing the functions and qualities, the
potential appraisal system must list mechanisms of judging the qualities
of employees such as Rating by others, games, tests, records.
Organizing the system: After covering the above preliminaries, he
must set up a system that will allow the introduction of the scheme
smoothly giving answers to some puzzling questions:
i. How much weight age to merit in place of seniority in promotions?
ii. How much weight age to each of the performance dimensions –
technical, managerial,135 behavioral qualities?
iii. What are the mechanisms of assessing the individual on different
indicators of his potential and with what reliability?
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8. Feedback: The system must provide an opportunity for every
employee to know the results of his assessment. “He should be helped
to understand the qualities actually required for performing the role for
which he thinks he has the potential, the mechanisms used by the
organizations to appraise his potential and the results of such an
appraisal”.
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9. Thank You!!
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