# The Use of Performance Appraisal: What Your Review Is Actually For Canonical URL: https://headwayskills.com/knowledge/working-with-your-manager/use-of-performance-appraisal/ Markdown URL: https://headwayskills.com/knowledge/working-with-your-manager/use-of-performance-appraisal.md Entity type: Article Last updated: 2026-07-07 Language: en Primary audience: professionals improving working with your manager at work Owner: Headway Skills Contact: https://headwayskills.com/contact/ ## Short answer Performance appraisals serve eight distinct purposes, from pay decisions to legal records. Here is what each one means for you, and which ones you can influence. ## Key facts - Title: The Use of Performance Appraisal: What Your Review Is Actually For - Category: Working with Your Manager - Primary skill: Working with Your Manager - Related skills: Building Self-Awareness, Influence - Primary keyword: use of performance appraisal - Source page: https://headwayskills.com/knowledge/working-with-your-manager/use-of-performance-appraisal/ ## What this page covers - Performance appraisals serve eight distinct purposes, from pay decisions to legal records. Here is what each one means for you, and which ones you can influence. - Practical guidance for use of performance appraisal - How this topic connects to Working with Your Manager ## Detailed explanation A performance appraisal form lands in your inbox with a meeting invite attached, and it is not obvious what the exercise is actually for. The use of performance appraisal splits into two categories: administrative uses — pay, bonuses, promotion, transfer, and the documented record behind them — and developmental uses — feedback, identifying training needs, and [setting goals for the next period](/knowledge/working-with-your-manager/review-goals/). Most reviews carry both at once. That double purpose is not a flaw in the process. It is how the system is built, and it explains why the same meeting can feel like a verdict in one moment and a coaching conversation the next. It also changes what you should walk in prepared to do. ## Administrative and developmental: the two families of use Almost every explanation of performance appraisal organizes around this split, and the Study.com lesson on the subject sets it out plainly. Administrative uses are decisions about your work conditions — what you are paid, whether you move up or across, and in harder years, who stays. Developmental uses are about capability — where your performance falls short, what training would close the gap, and what you should be aiming at next. The practical difference is who the output is for. Administrative uses send information away from you: upward to compensation committees, sideways to HR, into files. Developmental uses send information back to you. A review that is heavy on the first and light on the second will feel like being graded. One that is heavy on the second will feel useful but may not move your salary at all. Knowing which family a given question in your review belongs to tells you how to answer it. The eight uses below are the specific forms these two families take. ## The eight main uses of performance appraisal ### 1. Pay, bonuses, and compensation decisions The appraisal is the basis on which remuneration gets administered: your current and past performance is assessed, and that assessment becomes documented justification for [a raise](/knowledge/working-with-your-manager/ask-for-a-raise/), a bonus, or an incentive payout. This is the use most employees care about most and see least of. The mechanism is worth understanding. Your rating rarely stays with your manager. It travels to people who never watched you work, and who read only what was written. That is why a strong verbal conversation with a thin written record so often produces a disappointing number. What survives the trip is the text on the form. ### 2. Promotion, transfer, and other employment decisions Appraisals identify strong and weak performers, and that identification feeds decisions about promotions, transfers, raises, and — when an organization contracts — layoffs and terminations. The notable detail is that this use is cumulative. Appraisal data builds a historical record of your capabilities and your growth trajectory, not a snapshot. A single strong review is a data point. A pattern of three moving in the same direction is an argument. This is also why an unexplained dip matters more than it feels like it should at the time: the record does not carry the context unless someone writes the context down. ### 3. Feedback on how your work is actually seen This is the developmental core, and often the only structured moment in the year when someone tells you plainly where you stand relative to what was expected. Two different things arrive in that conversation and they are easy to confuse. Evaluative feedback is the rating — a judgment about performance already delivered. [Developmental feedback](/knowledge/self-awareness/developmental-feedback/) is guidance about what to do differently going forward. Reacting to the second as though it were the first is the most common way people waste their own review. If your manager suggests a change in approach and you defend the past instead of engaging with the suggestion, the useful half of the meeting closes. ### 4. Identifying your training and development needs The appraisal is where a supervisor identifies whether a training need exists and what remedial steps it calls for. That determination feeds performance improvement plans, training decisions, and career planning. For you, this is the one section of the form with real money behind it. Training has a budget; encouragement does not. It is also the most negotiable part of the conversation, because you are allowed to propose what would help rather than wait to be assigned something. The catch is that you have to know what your actual gaps are, and most people discover theirs from someone else's rating rather than in advance. If you would rather have your own read first, [mapping your skill gaps early](https://assessment.headwayskills.com/) puts you in the meeting with a proposal instead of a reaction — and the gaps it surfaces are learnable, not verdicts. ### 5. Setting goals and expectations for the next period Reviews look backward and forward at once. The forward half is where next period's expectations get written down, and this is the part people treat as paperwork when it is closer to a contract. Whatever gets recorded becomes the standard you are measured against at the next appraisal. A goal written vaguely — "improve communication with stakeholders" — hands the interpretation to whoever evaluates you a year later, when the circumstances and possibly the manager have changed. A goal written specifically, with a visible outcome attached, protects you. This is the single highest-leverage minute in the whole meeting and it is usually spent nodding. ### 6. Creating a documented record Appraisals function as legal documentation. According to TechClass's guidance on performance-review compliance, reviews serve as evidence in wrongful termination, discrimination, and retaliation claims, helping demonstrate that employment decisions rested on documented performance rather than unlawful factors. Once you know this use exists, a lot of otherwise puzzling behavior makes sense: the hedged and careful wording, the insistence that concerns be put in writing, the reluctance to say anything in a form that has not been said before. It also has a direct consequence for you. A concern raised verbally and never recorded effectively did not happen — and so does a contribution praised in a corridor and never entered anywhere. The written record is the version that persists, which makes it worth reading closely and worth responding to in writing when it is wrong. ### 7. Succession planning Appraisal data feeds succession planning — the organization's picture of who is ready for greater responsibility. EBSCO's overview of performance appraisal names this as a significant concern for HR managers. What makes this use distinctive is that it is invisible to the person being appraised. Readiness categories are assigned in rooms you are not in, on the basis of a record you helped produce but do not control. You cannot attend those conversations. You can make sure the record they read contains evidence of the work you want to be considered for, which mostly means [making results visible](/knowledge/influence/build-good-reputation-work/) before anyone asks. ### 8. Measuring whether the organization's training worked The last use has almost nothing to do with you individually. Appraisal data is aggregated for personnel planning, including evaluating the company's own training and development programs by comparing appraisals taken before and after employees complete them. It is worth knowing anyway, because it explains something that frustrates people every year: why the form is so standardized and so rigid. The data has to be comparable across hundreds of people and across years. The boxes are not there to capture the texture of your particular job. They are there to be counted. ## The skills that decide how much you get out of a review Read the eight uses together and a pattern surfaces. Only one of them — the feedback conversation — depends on your participation to happen at all. The other seven proceed whether you engage or not. What separates people who come out of appraisals well from people who come out puzzled is rarely the quality of their work that year; it is what they do around the process itself. That is a handful of specific, learnable behaviors. **Working with Your Manager** is the closest fit. Performance reviews sit inside this skill as a named piece of it: preparing properly, influencing your own evaluation, keeping the conversation future-focused, and asking for what you want rather than hoping it gets offered. Most of the outcome is set before the meeting, by whether your results were visible during the year, whether expectations were actually aligned, and whether one-on-ones happened at all. Disagreeing with an assessment belongs here too — it is treated as a normal move inside a working partnership, not a confrontation. **Building Self-Awareness** governs the receiving end. The sequence that works is understanding the feedback first, then adding your own view, then reflecting — in that order, which is harder than it sounds when a rating has just landed. This skill also covers asking for specific, future-focused advice, which is the move that converts a backward-looking score into something you can use. Appraisal is precisely where blind spots surface under pressure, so it is the moment the skill either holds or doesn't. **Influence** covers everything that happens before the form is opened. Ratings are assembled from what an evaluator can recall and evidence, which is why a reputation built on consistent delivery usually decides the result in advance. The skill supplies two moves the standard advice never gives employees: understanding what the appraisal is worth to the organization, and being willing to ask — for the rating, the scope, the development budget. If a full yes is unlikely, small wins still count. The free **Job Skills Test** scores all twelve of the work skills this framework treats as buildable, these three included, so you can find out [which of these is weakest](https://assessment.headwayskills.com/) before it shows up in someone else's assessment of you rather than your own. ## What this looks like from where you sit You may already recognize some of this in how you handle your own reviews — the note you keep of what you delivered, the question you ask when a comment is vague, the instinct to get an agreement written down. Those are the same behaviors, in early form. None of this depends on being a naturally confident or naturally organized person. These are things you learn to do, and you keep being yourself while doing them. Where there is a gap, it means you have not learned that part yet — nothing more permanent than that. What does change is the stakes. The higher you go, the more of your compensation, scope, and standing runs through this one process, and the less anyone will explain it to you. The fact that you went looking for what an appraisal is actually for, before sitting in one, is the part most people skip entirely. ## See where your skills stand before the next review The only thing left is to find out which of these skills is currently costing you the most. The **free** Job Skills Test is a self-assessment of your work skills: it takes seven minutes, scores you across all twelve of the skills in this framework, and shows you which ones would make the biggest difference to how your next appraisal goes. You get a clear result at the end, not a report to interpret. It is a finishable task. Do it now and you will walk into your next review knowing your own read on your strengths and gaps, rather than hearing someone else's first. **Get my skills profile** Free, seven minutes, and finished long before your next review. ## Who this is for - Professionals building practical workplace skills - Readers looking for specific, usable work advice - Managers, educators, and coaches supporting career readiness ## Common questions ### What is this guide about? Performance appraisals serve eight distinct purposes, from pay decisions to legal records. Here is what each one means for you, and which ones you can influence. ### Which Headway skill does this connect to? This guide connects primarily to Working with Your Manager. It also relates to Building Self-Awareness, Influence. ### What is the recommended next step? Use the free Work Skills Test to reflect on which work skill to improve next. ## Related pages - https://headwayskills.com/knowledge.md - https://headwayskills.com/knowledge/working-with-your-manager.md - https://headwayskills.com/knowledge/self-awareness.md - https://headwayskills.com/knowledge/influence.md - https://headwayskills.com/work-skills-test.md ## Citation guidance Use the canonical page when citing this content: https://headwayskills.com/knowledge/working-with-your-manager/use-of-performance-appraisal/ Preferred summary: "Performance appraisals serve eight distinct purposes, from pay decisions to legal records. Here is what each one means for you, and which ones you can influence." ## Change log - 2026-07-07: Content collection version published.