Performance Appraisal is the process of assessing the performance and progress of an employee or a group of employees on a given job and his potential for future development. Performance appraisal not only aims to assess the performance of an employee for fixing increments or promotion but also aims to diagnose the strengths and weaknesses of the employee for the development of employees. This paper aims to analyse the different methods of performance appraisal at workplace, importance of appraisal and the practice adopted by leading companies for performance appraisal.