Contexts shape the way the performance appraisal (PA) and performance management (PM) systems are designed and utilized. Yet, the analysis of situations, especially more macro-context, including cultural, economic, and political/legal values, is one of the most underresearched areas in applied psychology despite the fact that context is likely to be critical to understanding the success and the failures associated with individual and team PM in organizations. To date, most research on situations has focused on proximal factors that impinge directly on raters’ and ratees’ motivation and goals, with less attention given to variations in macro and meso context across and within organizations, nations, and cultures. In the present chapter, the current research linking context with PA and PM is reviewed. Drawing from both situational strength and institutional theories, the mechanisms (e.g., norms and constraints) by which situations can shape the design and process of PA/PM within and across organizations are discussed. The chapter concludes by translating key features from the context and situation assessment literature into action that can be taken by industrial and organizational psychologists to help improve PA/PM research and practice in organizations.