Using adequate psychometric tools, simulations and interviews will provide you with the best insight into real capabilities of your employees.
Testing certain abilities, personal characteristics and motivation for work, you will find out their real potentials. It allows you to have adequate expectations of each employee and prevents you from making unrealistically high or too low demands on them.
Creating personal folders facilitates monitoring and access to important data for each employee. Thus, whatever the important decision you are about to make, you will have all the relevant information in one place which will greatly help you make the right decision no matter whether it refers to rewarding, punishment, promotion, redeployment or layoff.