Installing VMware Tools is an essential step to improve the performance and functionality of your virtual machine (VM) when running on VMware. VMware Tools provides enhanced graphics, better mouse integration, improved networking, and other optimizations. Here's how you can install VMware Tools:

Step 1: Start Your Virtual Machine

Make sure your VM is up and running.

Step 2: Open a Terminal or Command Prompt

You'll need to access the command line interface of your VM.

Step 3: Mount the VMware Tools Installer

In VMware's menu, navigate to VM > Guest > Install/Upgrade VMware Tools. This action mounts the VMware Tools installer in your VM.

Step 4: Locate the VMware Tools Installer

In your VM, you'll find a new CD/DVD drive that contains the VMware Tools installer. It may automatically open or you can manually access it.

Step 5: Extract and Install VMware Tools

For Linux:

1. Open a terminal window.
2. Create a directory where you'll extract the tools. For example, mkdir /tmp/vmware-tools.
3. Copy the installer file to the new directory. You can use a file manager or run a command like cp /media/cdrom/VMwareTools-x.x.x-xxxx.tar.gz /tmp/vmware-tools (replace x.x.x-xxxx with your version).
4. Change to the directory: cd /tmp/vmware-tools.
5. Extract the contents with tar -zxvf VMwareTools-x.x.x-xxxx.tar.gz (replace x.x.x-xxxx).
6. Run the installer: sudo ./vmware-tools-distrib/vmware-install.pl.

For Windows:

1. Run the installer from the CD/DVD drive. Follow the prompts.

Step 6: Follow the Installer Prompts

The installer will ask you some questions. The default options are generally fine, but review them to ensure they suit your needs.

Step 7: Reboot Your Virtual Machine

After installation, it's a good practice to reboot your VM.

Step 8: Verify Installation

Once your VM is back up, you can verify the installation by checking if VMware Tools is running.

Improving Server Performance:

Besides installing VMware Tools, there are additional steps you can take to enhance the performance of your VM:

1. Allocate Adequate Resources: Ensure that your VM has enough CPU, RAM, and disk resources allocated to it in the VMware settings.

2. Optimize Guest OS: Configure your guest operating system for performance, which includes disabling unnecessary services and background processes.

3. Use Paravirtualization Drivers: VMware offers paravirtualized drivers for storage and network controllers which can improve performance.

4. Adjust Virtual Machine Power Management Settings: Depending on your use case, you might want to adjust the power management settings in your guest OS.

5. Monitor and Optimize Disk I/O: Regularly monitor disk I/O and consider using technologies like VMware vSAN or other storage optimization techniques.

6. Network Configuration: Ensure that your network settings are optimized for your specific use case.

7. Regular Maintenance: Perform routine maintenance tasks like defragmenting disks (for Windows VMs) and applying updates.

Always remember to monitor your VM's performance to identify any potential issues and take appropriate actions.