As all electricity sector companies in Oman, Majan Electricity Company has adopted a performance appraisal system as a tool to achieve strategic goals for the company through the potential of its employees and at the same time measuring their performance. The result of regression analysis has assessed the relation between the variables of this study and the initial objective has been proven true that there is an impact for performance appraisal system on employees' motivation and satisfaction. It has been found also, that the employees' performance appraisal will not be affected by the accuracy of performance appraisal system in measuring the performance accurately and rater errors that may exist in the evaluation process