Appraisal letter

Appraisal letter meaning

An appraisal letter is a formal document or written communication that is typically used in a professional or employment context to evaluate, assess, or review the performance, achievements, or contributions of an individual or an employee within an organization. It is also sometimes referred to as a performance appraisal letter, performance review letter, or employee evaluation letter.

Purposes of an appraisal letter

Performance feedback

To provide feedback to the employee about their job performance, including strengths and areas for improvement.

Goal setting

To set new performance goals or objectives for the employee for the upcoming period.

Salary or compensation review

In some cases, appraisal letters may also include information about salary increases, bonuses, or other compensation adjustments based on the employee's performance.

Career development

To discuss career growth opportunities, training, or development plans for the employee.

Appraisal letter format

[Your Company Letterhead][Date]

[Employee's Name][Employee's Address]

Dear [Employee's Name],

I am writing to inform you of the recent changes to your compensation package following your performance review.

We are pleased to announce that your salary has been increased from [Previous Salary] to [New Salary], effective [Effective Date]. This adjustment reflects our appreciation for your hard work and dedication.

Your continued contributions are vital to our team's success, and we look forward to your continued growth within the organization.

If you have any questions or require further clarification, please do not hesitate to reach out.

Sincerely,

[Your Name]

[Your Title]

[Company Name]

Why is an appraisal letter important?

An appraisal letter is a critical organizational tool that serves several key purposes:

• Acknowledges Contributions: Recognizes and validates an employee’s performance and achievements.
• Communicates Changes: Officially documents salary revisions, bonuses, promotions, or role changes.
• Provides Feedback: Offers clarity on performance ratings, strengths, and improvement areas.
• Legal Proof: Acts as formal documentation for income and employment changes, useful for loans or tax purposes.
• Builds Engagement: Enhances employee morale and trust through recognition and transparency.
• Supports Planning: Aids HR in tracking performance for promotions, training, or succession planning.
• Appraisal letters are essential for fostering accountability, motivation, and alignment between organizational goals and employee performance.

When is an appraisal letter issued?

An appraisal letter is typically issued annually or semi-annually after an employee’s performance review cycle concludes. It serves as the official communication of the outcome of that appraisal process  summarizing performance, achievements, and compensation changes.

Apart from the annual review, appraisal letters may also be issued in the following cases:

• Promotions: When an employee moves to a higher role or takes on additional responsibilities.
  
• Salary revisions: When compensation changes are made based on exceptional performance, company policy, or market adjustments.
  
• Role changes or transfers: When employees are reassigned to a new department or function, along with updated roles and pay structure.
  

In most organizations, appraisal letters are distributed after performance discussions between employees and their managers, ensuring transparency and acknowledgment of individual contributions.

Want to check your appraisal impact? Use our Appraisal Calculator to estimate your salary revision.

How to write an appraisal letter (Steps for HRs or managers)

Knowing how to write an appraisal letter correctly is crucial for HR professionals and managers. A well-drafted letter not only communicates performance results but also boosts employee morale and reinforces a culture of appreciation.

Here’s a step-by-step guide on how to write an effective appraisal letter:

1. Start with appreciation
   Begin with a positive tone by appreciating the employee’s contributions during the appraisal period. For example:
   “We truly value your commitment and consistent performance over the past year.”
   This sets a respectful and motivating tone for the rest of the letter.
   
   
2. Mention the review period clearly
   Specify the exact duration being reviewed e.g., “for the appraisal period April 2025 to March 2026.” This provides context for the evaluation and helps both HR and the employee maintain proper documentation.
   
   
3. Highlight key achievements and performance metrics
   Summarize the employee’s accomplishments, goals achieved, or key performance indicators (KPIs) met during the cycle. This section demonstrates fairness and recognition.
   
   
4. Include salary revision and compensation details
   Clearly mention the new salary, increment percentage, bonus, or any promotion details. Example:
   “Your salary has been revised from ₹7,00,000 to ₹8,00,000 per annum, effective April 1, 2026.”
   
   
5. Add future goals or expectations
   Outline the next steps or goals for the upcoming cycle to align employee performance with company objectives.
   Example: “We encourage you to continue developing your leadership and mentoring skills in the coming year.”
   
   
6. End with a congratulatory and motivational note
   Conclude the letter on an encouraging note to motivate the employee. Example:
   “Congratulations once again on your performance. We look forward to your continued success and valuable contributions.”

Appraisal letter format: 

[Your Company Letterhead][Date]

[Employee's Name][Employee's Address]

Dear [Employee's Name],

I am writing to inform you of the recent changes to your compensation package following your performance review.

We are pleased to announce that your salary has been increased from [Previous Salary] to [New Salary], effective [Effective Date]. This adjustment reflects our appreciation for your hard work and dedication.

Your continued contributions are vital to our team's success, and we look forward to your continued growth within the organization.

If you have any questions or require further clarification, please do not hesitate to reach out.

Sincerely,

[Your Name]

[Your Title]

[Company Name]

Appraisal letter example

[Your Company Letterhead][Date]

[Employee's Name][Employee's Address]

Dear [Employee's Name],

I am delighted to inform you that your salary has been increased from [Previous Salary] to [New Salary], effective [Effective Date]. This change is a result of your excellent performance and commitment to our team and organization.

Your hard work and dedication do not go unnoticed, and we believe this adjustment is well-deserved. We look forward to your continued contributions in the future.

If you have any questions or need further information, please feel free to contact us.

Congratulations, and thank you for your valuable contributions.

Sincerely,

[Your Name]

[Your Title]

[Company Name]

Is an appraisal letter different from a performance evaluation or review letter?

Yes, an appraisal letter differs from a performance evaluation or review letter.

• Appraisal Letter: Issued to formally communicate rewards, recognition, or promotions based on the evaluation of performance during an appraisal cycle.
• Performance Review Letter: Serves as a feedback tool to assess whether an employee's goals are being met and to identify areas for improvement, helping to optimize strategies and address performance gaps.

What does an appraisal letter for an employee contain?

An appraisal letter is a formal document outlining the outcomes of an employee's performance review. It typically includes:

• Employee Details: Name, designation, employee ID, and department.
• Performance Summary: Highlights of the employee’s contributions, achievements, and overall performance during the appraisal period.
• Performance Rating: The rating or score assigned during the performance evaluation.
• Salary Revision Details: A breakdown of changes in salary, including new components like Revised CTC (Cost to Company), increment percentage, and changes in basic salary, allowances, or bonuses.
• Promotion Information (if applicable): Confirmation of a change in role, designation, or additional responsibilities.
• Effective Date: The date from which the revised salary or position is applicable.
• Appreciation Note: A formal acknowledgment of the employee's contributions and efforts.
• Terms and Conditions: Any conditions related to the revised compensation or role.
• Signature and Authorization: Signatures of the authorized personnel and the company’s official seal (if required).
• This structured communication not only motivates employees but also serves as an official record of career progression within the organization.

Self-appraisal comments by employee examples

A self-appraisal is an essential part of the performance review process, where employees evaluate their own performance, achievements, and areas of improvement. Writing effective self-appraisal comments helps employees communicate their value, align with organizational goals, and prepare for their appraisal letter discussion.

Here are a few examples of self-appraisal comments you can include in different categories:

• Performance: “I achieved 120% of my sales target this quarter.”
• Teamwork: “Collaborated effectively with cross-functional teams to meet deadlines.”
• Leadership: “Mentored new team members to improve onboarding efficiency.”
• Learning: “Completed an advanced Excel course to enhance reporting accuracy.”
• Future Goals: “Aim to take more ownership of client communication next year.”

Tip: Keep comments factual, specific, and focused on measurable results.

“For more self-appraisal comment examples, check out our detailed guide here: 80+ Self-Appraisal Comments