Without effective performance evaluation, R&D organizations will find it hard to motivate their R&D scientists and engineers: 'How should R&D managers design the performance measurement system most suitable to their own organization?' is a critical question. Based on a large-scale survey covering over 1200 R&D scientists and engineers in Korean R&D organizations, we put Forth the following lessons. Although most of the R&D personnel prefer their compensation based on their performance, they indicate that lack of fair performance evaluation system could be the biggest obstacle towards implementing such a compensation scheme. They also suggest that a fair performance evaluation should utilize more behavioral and qualitative measures such as leadership and mentoring for younger researchers, and bottom-up (e.g., R&D researchers' evaluation of their own bosses, say, R&D managers) as well as horizontal (e.g., peers and/or colleagues) evaluation schemes. (C) 2002 Elsevier Science Ltd. All rights reserved.