The performance appraisal system must have the following characteristics:
1. It must be bias free the evaluator must be objective and the methods of appraisal must be fair and equitable. The atmosphere must be that of confidence and trust.
2. It must be relevant it should only measure behaviours that are relevant to the successful job performance and not any other personal traits.
3. It should be acceptable to all the performance standards as well as the appraisal methods should be developed by joint participation and joint collaboration.
4. It should be reliable, dependable, stable and consistent. High reality is essential for correct decision making and valid action studies: It should be sufficiently scientific so that if an employee is evaluated by two different evaluators, then the result should be significantly the same.
5. It must be able to objectively differentiate between a good employee and an ineffective employee. Rating an employee “average” does not adequately the degree of effectiveness. Hence the technique must be sufficiently sensitive to pick up the differences between an effective and an ineffective employee.
6. It must be practical, sound, clear and unambiguous, so that all parties ‘concerned understand its implications.