The authors offer a practical guide for improving the appraisal of a resident's performance. They identify six major factors that compromise the process of observing, measuring, and characterizing a resident's current performance, forecasting future performance, and making decisions about the resident's progress. Factors that compromise any of these steps lead to individual and collective uncertainty and decrease faculty confidence when making decisions on a resident's progress. The six factors, addressed in order of importance, are inaccuracies due to (1) incomplete sampling of performance, (2) rater memory constraints, (3) hidden performance deficits of the resident, (4) lack of performance benchmarks, (5) faculty members’ hesitancy to act on negative performance information, and (6) systematic rater error. The description of each factor is followed by a number of specific suggestions on what residency programs can do to eliminate or minimize the impact of these factors. While this article is couched in the context of the performance evaluation of residents, everything included pertains to measuring and appraising medical students’ and practicing physicians’ clinical performance as well.