The system is implemented by all major corporate across the globe. In India, all new age corporate follow this appraisal concept. During 20th century, across globe there is a problem for corporate with continues raise in fixed hike for all employees and process of unionization. So some mechanism required to minimize this effect of workers unity. The system also creates a isolated work culture and way of life. Appraisal system is not only depends on performance of individual but various others hidden baseless parameters were consider by the managers in appraisal process. Core understanding of this system can be simple stated as "Survival Of the Fittest".
Among employees this system creates negative thought process on fellow employees. The system makes team work a act of dynamics but individuality makes heavy production. The competitive environment developed by this system make every employee too fight individual proving them for salary hike rather than collective bargaining of union for common hike in 20th century. So employees started to involve in isolated act of production This process created culture started to reflect in social life of the employees. They started to think about there social problem in isolated environment and solve it individual rather than united approach of solving a social problem. It creates a attitude of superior for people with high performance and a stressful depression state for people in low performance cadre. This system also stagnant employees mind from developing them self rather then allow to experience new ideas.
In one way technically the system is wrong and other way system in cultural flaw. In India the system is further biased by some geographical identities. As I wrote previously the complete system hangs in the hands of employees manager decision, mangers are like slave lords in India. Indian Managers are mostly biased in decision making during appraisal process. The parameter is not alone performance based in India it dependent on Manager's tit for tat , Manager's favoritism, caste, region, language, religion ,gender etc. Indian managers are mostly upper caste Hindu male dominated people seated to rate a diverse spectrum of employees. Most of the people getting this good rating/promotion are from upper caste is that mean other caste people not talented. It's biased nature to pull up people of there orgin strongly exists in work culture. Managers use it as assault weapon to employees in wrong terms with him/her to rate low. Women's have additional problem from there male bosses as in the form harassment. They were not aware its a harassment but they need to keep quite. Women employee were saturated after certain level of hierarchy. Is it happen naturally? No, our common Indian male attitude about women saturating them from progress. A women's are not qualified to do more than this work is deep imprinted in most of the male managers. This system completely wiped the rebel sprite of employees to question the managers of wrong doings.
Jack welch introduced this system into GE corporation the productivity increased to pinnacle. During his tenure of CEO, company value rose by 4000% but other side employees were regularly thrown out with poor performer brand. One sample of GE is enough to show case how much this appraisal system driven company value. Actually this growth not reflected in big deal in employee salary and job security of the employees. The system can make employee to feel good but overall this appraisal system is a new way of exploitation of employees labor. It's the reason every time a employees union formed in a corporate office first demand would be wipe out appraisal system. So the solution for it may be common fixed hike for all employees based on there seniority. Open promotion policy based on seniority and single window system. To achieve this Employee union is must for our collective bargaining. Let keep marching towards a society without exploitation by keep uprooting system like this on the path.