This chapter introduces readers to the primary concepts, theoretical frameworks and research literatures that explain how rater-ratee relationships affect the Performance appraisal (PA) process and performance ratings. It is important to note that PA is but one very important aspect of an organization's overall performance management process. The traditional psychometric model of PA assumes that ratings that are free from halo, leniency and range restriction are accurate, and that training raters to avoid these biases, or developing rating instruments which prevent these biases, will increase rating accuracy. In order to understand how to train raters to more accurately observe ratee performance, researchers developed theoretical models based on a cognitive psychology research tradition. Practitioners must be aware of how rater-ratee relationships affect performance ratings when designing PA systems, and evaluating their effectiveness. Raters will be more motivated to rate accurately, again despite the interpersonal characteristics of the rater-ratee dyad, if there are punishments for rating inaccurately.