Abstract: In order to grow and sustain in the globalized economy, organizations need to maximize the performance of their employees. Performance appraisal is a universal human resource management practice. Educational institutions are not in the exception. In an educational institution, teacher’s performance has a strategic role and they influence the performance of students and the reputation of the university. But in our country the practice of performance appraisal system is not very familiar with the educational institutions. Only a few leading private universities of Bangladesh are observed to use the tool of performance appraisal but here the evaluation is conducted mostly by the students. The management and the higher authority of the universities are not conscious about accurate application of performance appraisal tools and techniques. The aim of this study is to evaluate the importance and effectiveness of the Performance Appraisal system to increase performance and motivation of the academics in the universities. A sample of hundred respondents was drawn from both the public and private universities and cluster, stratified and convenient sampling techniques were used to collect data by using a structured questionnaire from various levels of respondents. Teachers have shown a mixed feeling about student evaluations. Data analysis showed that the university teachers don’t see their performance appraisal system accurate and fair because the outcomes are not being used for making decisions on promotion, training and development of the employees. So, the management should review the appraisal system of the universities and outcomes, so that all the components of their job are evaluated and rewarded.