Performance appraisal is concerned with the difference among employees in terms of their performance. But job evaluation is the analysis of various jobs to know the demands which the normal performance of particular jobs makes on average employees.
The purpose of performance appraisal is to appraise the performance of individuals to take decisions on issues like increase in pay, transfer, promotion etc. It provides employees with information by rating their strength and weaknesses. It also serves as a guideline for the management to consider the type of training which should be imparted to the employees. The purpose of job evaluation is very limited as it tries to determine the worth of the job on the basis of demands made by it on the average workers.
Merit rating is used as the basis of sound personnel policies in relation to transfer, promotion etc.; but job evaluation is used as a basis of wage structure in the organisation.