Each step of the performance appraisal is important because they are all interconnected and play a crucial role in the success of each employee i.e. the success of the organization. However, the one step that is at the heart of the process is defining the performance criteria. This is because if there are little or no standards set for how employees should perform to deliver optimal results, managers and employees may set goals and make future decisions based on emotional responses or let biases get in the way.