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The reward system of many organizations depends on performance appraisals, made by the managers. Certainly, appraising an employee’s performance is often more difficult than people think. The manager gives a performance appraisal with a subjective view, which affects the self-awareness of the employee and the perception of the manager’s ability to evaluate performance. It is a tool to appraise the employee’s strength and weaknesses and provide helpful measures to overcome weaknesses. Motivated employee will improve his workings to be more effective in terms of quality and quantity, so he can participate efficient to achieve the objectives of the organization. This study is analysing the relationship between performance appraisal and employee motivation. The research is based on literature and also interviews, which are conducted with managers of leading positions, who have the ability and permission to evaluate employees. The interviews deliver primary data that represents the opinion and thoughts of the managers.