The study aimed to determine the competencies of sales employees and the organizational environment as bases for the development of a performance appraisal tool. The research was conducted in seven retail stores, with the sales employees as the respondents. Five top performing sales employees and two store supervisors were invited for focus group discussion (FGD) using a behavioral event interview questions to identify the successful performance. Their answers were coded and were related to the competency dictionary of Spencer and Spencer and. The 13 competencies gathered from the responses were teamwork and cooperation, customer-service orientation, concern for order and quality, impact and influence, information seeking, organizational commitment, accountability, self-confidence, empathy, integrity, relationship building, achievement orientation and positive self-concept. These competencies were the bases for the construction of a performance appraisal tool to measure the level of competencies of the sales employees, and the level of organizational environment as perceived by the sales employees. The study utilized the descriptive-correlational method using data gathering through focus group discussion (FGD), and the competency-based questionnaire, validity and reliability of which have been established. Results revealed that sales competencies and the perceived organizational environment were significantly related. Although, the total mean showed that sales employees were competent to perform the tasks required by the company, their levels of competencies varied. Those with low ratings would be the bases for the proposed group counseling and training program.