The commitment of many health care organizations to CQI calls for the introduction of tools, principles, and procedures to ensure that the performance improvement in all parts of the organization is initiated. In order to determine whether the desired performance standards are indeed being achieved on all organizational levels, it is necessary to apply a holistic performance appraisal tool that would allow for an assessment of the company's progress from multiple dimensions. This article details the design of the multilevel appraisal model, explicates where the evaluation errors may occur, and presents managerial implications for successful implementation of this evaluation tool.