The major point in effective human resource utilization is ensuring a clear link between the tasks and activities that employees are involved in, and the achievement of organizational goals. Making the right decision/plan in appraising the performance of employees require identifying the employees’ strength and areas for improvement or developmental needs. Accordingly to appraise the performance of employees effectively, performance problems must be spotted, constructive feedback should be provided, and actions to improve performance must be measured. In that regard employee participation in preparing and actualizing performance plan establishes the basis of performance appraisal. Hence forth the purpose of performance appraisal is to decide the aspect of performance that has to be evaluated. Therefore, a strong attachment between employee’s personal objectives and organizational goals must prevail so that the result could be efficient and effective. Performance appraisal system or its elements demonstrated effective elsewhere should be examined in the light of the specific needs of the organization. It needs to be designed to fit the specific requirements of the organization.