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Performance appraisal (PA) refers to the methods and processes used by organizations to assess the level of performance of their employees and to provide them with a feedback. This process can be used for both developmental and administrative purposes. The research on PA includes examination of the psychometric aspects of the appraisal tools, the cognitive process and the biases involved, and the social context. Although PA is an important tool for managing employees, managers, and workers are rarely satisfied with it. Therefore, clearly defining the purposes of the PA and addressing the employees reactions are essential to the success of the PA.