According to Hills and Jones (1998),
“Employee productivity is one of the key determinants of an enterprise’s efficiency and cost structure. The more productive the employees, the lower the unit cost. The challenge for a company’s HR function is to devise ways to increase employees’ productivity. There are three main choices: employee training, self-managing teams, and pay for performance” (P.157).
How do an organisation establish who to train, how, when or what? How does one ensure a self-managing team or how do one establish who to pay and for what performance? This is all that performance appraisal entails.