Hi Swetha,
Before you proceed with Performance Appraisal and go further to frame a Policy for the same, I would suggest you answer the following questions to yourself. If your answer to all these questions are in affirmative, I promise I would talk much more on Performance Appraisal Policy.
1. What is your process of recruitment? You may start from the bottom level and slowly move up. Talk to your colleagues and find you what all are looked for while staff at different level appear for interview?
2. Do you have KRAs drawn for all levels? Is it provided to all freshly recruits at all level?
3. Do you have "Responsibility Metrics" drawn for all levels? Does "Mentorship" considered while drawing Responsibility Metrics?
4. What are criteria for promotion in your organisation? Does Mentorship is looked into while promoting a Staff?
5. Do you have a system of informal meet of Departmental Staff? Has it ever been felt by your Management that Staff be asked about constraints faced in venturing into KRAs?
6. If suppose the bottom most staff are withdrawn by the Management, how confident the next level be to continue working as if nothing happened?
7. If in the similar way as in 6 above you remove a particular level of staff, what odds would the next higher level face in handling subordinates? Would there still be mentorship? Would subordinates be comfortable with one level in between taken off?
8. Does your Company have "Growth Curves" for all levels of Employees? If yes, how often one level discuss the same with immediate juniors? Do they advise juniors improvement techniques?
9. How often your Management feel "Performance Appraisals" be done?
10. Do you have a system of providing training to your staff?
I hope the questions above made you understand "Preparatory Steps" for Performance Appraisal. I feel one got to have a very clear idea "what all are expected" to do appraisal successfully. Also, if there is no mentorship, appraisal would never fetch desired result I feel.
Regards & Wishes,