The Prony technique is used to improve the performance of power system stabilizers (PSS). A method for evaluating the performance of the PSS is discussed. This method also helps in identifying the dominant modes. Two methods for improving PSS performance are discussed: (i) retuning the complete PSS and (ii) adding an additional phase compensator in cascade with an existing PSS to improve damping of specific modes. The latter method is chosen because of its inherent advantages. The proposed method is tested on two systems namely, a 2-area system and the WSCC 3-machine system.