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The objective of the study was to assess the practices and problems of employee performance appraisal system. The intention of the study was that majority of the employees were demotivated in their work, were not satisfied regarding their performance evaluation, complaining was heard among departments for rewards and frequent turnover of employees. The importance of improving evaluation system, continuous training for awareness creation concerning the method of evaluation, the commitment of both evaluator and evaluates, being trustworthy and loyalty through the process of evaluation were recommended to overcome the challenges and bottlenecks of employees performance appraisal system.