Performance appraisals are a major component of human resource management systems used by organizations to measure and manage what is considered the most valuable resource they have; human capital. This report aims to evaluate the effectiveness of performance appraisals and their application to both the employer and its employees, taking into account various rationales for its implementation. This objective will be achieved through an in-depth review of the concept of performance appraisal, its evolution in business organizations and the existing literature on the subject, as well as its effects (both positive and negative) on the the organization as a whole and on its employees. It will be argued that, although of relative importance to performance management systems in organizations, performance appraisals fail to achieve the lofty ideals and objectives that characterize their implementation. Performance reviews are a key part of the performance management process in organizations and are used to obtain feedback on employee performance levels for a given period of time. Performance appraisals have been defined as the process that allows companies to measure and therefore evaluate an employee's achievements and behavior over a certain period of time (Devries et al, 1981). It is the process of identifying, observing, measuring and developing human resources in organizations (Cardy and Dobbins, 1994). Various organizations use different performance appraisal systems and have differing opinions on performance goals, causing some confusion about the purpose of performance appraisal systems (Buckley & Wiese, 1998). Performance is therefore the critical factor that is addressed in understanding and developing...... middle of document ...... within the organization. In this way, management is able to systematically align its operational goals with employee development efforts and job expectations. Performance reviews also give organizations the opportunity to resolve performance issues without conflict by providing evidence of actual job performance and productivity. In this way, high and low performing students are easily identified and relative recommendations are made. Although performance appraisals satisfy many organizational objectives, the focus of its activities is to provide guidance and information to employees to improve job performance and productivity (Latham et al., 1993). This should remain the primary objective that performance appraisal systems should seek to achieve, leading to this article addressing issues that affect the effectiveness of its implementation..