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Globally, organisations are adjusting to meet the challenges of the constantly‐changing marketplace. In the area of human resource management, many multinational organisations are focusing in making the organisation more productive, cost‐effective, and customer service oriented. Recognising that an organisation’s employees are the key to its global success, many organisations are re‐evaluating their methods of appraising and motivating employees. As a result, annual employee evaluations, which have been a staple of human resource managers in many industrialised nations for decades, have been widely criticised in recent years. This article highlights the importance of using such evaluations not only in their traditional function for employee appraisal, but also as a tool for employee motivation, as a legal defence for selection, and as part of the strategic planning process.

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