An effective performance-appraisal system must fit the organization, clarify what management expects of employees, measure employees' current performance, and provide an unbiased evaluation of an individual's performance. In addition to training managers in the performance-appraisal process, employees should also be trained in this process so they can assume enlightened control over their own performance in accordance with departmental standards. The Sunnyvale performance-appraisal system encompasses employees involved in every major city function. Each function is measured by its productivity in helping the city to achieve goals set by the city council. Managers prepare annual management achievement plans. These plans outline their assignments for the upcoming year according to legislative priorities set by the city council and service objectives reflected in the budget. At the end of the fiscal year, the department audits these managers, based on the successful completion of their assignments. The plan offers bonuses and salary increases under its pay-for-performance program. Under this program, it is possible for managers to earn increases in pay if all objectives in their respective programs are exceeded. A table showing the performance pay plan and 5 notes is included.