Abstract: the present study examines work – place performance management through performance appraisal system in two major government owned companies of India via: Steel Authority of India (SAIL) and Indian Railways (IR). This study is based on secondary information from Steel Authority of India (SAIL) and Indian Railways (IR). Once the employee has been selected, trained and motivated, he is then appraised for his performance. Performance appraisal is the step where the management finds out how effective it has been at hiring, placing an employee. Employee appraisal technique s are said to have been used for the first time during first world war, when, at the instance of Walter Dillscott, the US army adopted the “man – to – man” rating system for evaluating military personnel. During the 1929-30 periods, rational wage structures for hourly paid workers were adopted in industrial units. Under this system the policy of giving grade wage increment on the basis of merit was accepted. These early plans were called merit rating programmes, which continued to be so called up to the mid fifties. By then most of these plans were of the rating – scale type, where emphasis was given to factors, degrees and points. But, now the older phrase merit rating is largely restricted to the rating of hourly paid employees and is used frequently in developing criteria for salary- adjustments, promotions, transfer etc. now, and appraisal places emphasis on the development of individuals and widely used to evaluate technical, professional, and managerial personnel.