The analysis showed that the usual performance appraisal systems are biased, inaccurate, and demonstrate inherent rater error. This situation has led to considerable dissatisfaction among both employees and agencies. In addition, costly litigation has led top management to pressure supervisors to avoid giving controversial evaluations. However, proper attention to the appraisal process rather than a focus on the evaluation form can overcome these problems. Essential components of an effective performance appraisal system include the development of meaningful job descriptions, the determination of performance standards, input from subordinates, mutual goal-setting, an appraisal conference, and a final agreement between the supervisor and the subordinate. Additional needed components, methods for implementing an effective system, figures, tables, notes, appended methodological information, and 89 references are supplied.