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Potential appraisal helps to identify what can happen in future so that it can be guided and directed towards the achievement of individual and organizational growth and goals. Therefore, potential should be included as a part of the performance appraisal in organisations.

Potential appraisals are required to:

  • inform employees about their future prospects;
  • help the organization chalk out of a suitable succession plan;
  • update training efforts from time to time;
  • advise employees about what they must do to improve their career prospects.
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