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ACCA Applied Knowledge · Business and Technology · Review and appraisal of individual performance

A manager at Kestrel Ltd holds annual appraisal interviews with her team. In each interview she reviews the employee's results against agreed objectives, and then agrees development needs and targets for the coming year. Which of the following best describes the main purpose of this process?

The main purpose is to review past performance and plan future performance and development. Appraisal gives feedback against agreed objectives, identifies training needs and sets new targets linked to organisational goals, so it is not just a tool for pay decisions or dismissal.

  1. ATo identify and reward past performance only, so that pay awards can be justified
  2. BTo review past performance and plan future performance and development, linking individual contribution to organisational objectivesCorrect
  3. CTo collect evidence that allows the organisation to dismiss poor performers quickly

Explanation

Performance appraisal is a forward-looking as well as backward-looking process: it assesses performance against objectives, gives feedback, identifies training and development needs, and sets future targets aligned with organisational goals. Option A is too narrow because appraisal is not only about reward. Option C is wrong because disciplinary action is a separate process, and using appraisal mainly for dismissal undermines its developmental purpose.

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