This review of the performance appraisal process discusses the major assumptions on which performance appraisal is based, the general goals of performance appraisal, and the characteristics of effective performance appraisal programs. The author stresses the dependence of the process on the assumption that human behavior can be changed; he emphasizes that the focus of the process must be on employee behavior rather than personality and that the importance of open, two-way communication between employer and employee cannot be overlooked. The report presents guidelines to assist managers conducting appraisal interviews, lists activities and behaviors that contribute positively or negatively to performance appraisal efforts, and offers a five-step program for conducting the appraisal process. (PGD)