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This paper discusses the utility, versatility, and pros and cons of the formal performance appraisal as one of the tools of management by objectives (MBO). Rather than rating the traits of an employee, performance appraisal based on MBO rates an employee's achievements toward both his professional goals and institutional goals. The paper outlines the evolvement of performance appraisals as derived from MBO approaches at two college libraries: Ohio University Libraries, Athens, Ohio, and the Iowa State University Library, Ames, Iowa. Sample appraisal forms and guidelines are provided, and four advantages of performance appraisal are listed: (1) long range institutional goals and individual career growth are focused upon, thereby fostering a supportive relationship between the two; (2) achievements are enumerated periodically and problems are immediately identified and solutions attempted; (3) communication is enhanced and staff contribution encouraged in collective goal setting; and (4) objectivity is fostered by a concrete factual basis for appraisal. A selected bibliography is included. (Author/THC)