The whole point of nutruting the resources is a three way cycle, first is to understand the potential, second is to set the targets & review them frequently and third is mentoring to guide them as well as the project to the success.

At the end of this three way cycle, the year end performance appraisal is just the common summary of the results and the outcome of your year end efforts.

Essentially, the point I am trying to make here is that you set up a criteria for your resources to meet and help / guide them to achieve it. So you have given your resources good opportunities to do well and you can judge them on their performance.

While I agree with the approach that managers should take, what we must realize is that appraisals & their outcome is still a very closed door and opaque process. Individuals do not realize that that appraisals are not absolute ratings but relative.

There is an increased need to make the system and the process transperent to the everyone. Here again the onus lies in the hands of the Project manager. An individual should know who are his/her peers, what the criteria are for measurement are and how they are being measured against those criteria and importantly where they fare as compared to others.

Transperency in performance appraisal can help bring out healthy competetion between team members and also reduce the possibility of dissatisfaction at the end of the year. During my stint I introduced self-evaluation sheets by which individuals could track their own performance as well. The primary goal was to make the performance criteria as objective as possible. I believe the ratio of objective evaluation to subjective should be about 80-20. But today it is more towards 20-80. We need to try and improve the process within our own spheres of influence.