Effective performance appraisal programs are based on two key principles: (1) the appraisal process must operate as a system, and (2) individual managers play a pivotal role and need the right tools and support. Performance appraisals serve several important functions for employees, supervisors, and organizations, including providing feedback for improvement or recognition, determining training needs, and informing compensation and promotion decisions. However, performance appraisal programs are often flawed due to a lack of preparation, training, and consistency among managers and departments. To be effective, performance appraisals must be standardized, reliable, and developed with employee input.