<![CDATA[Performance appraisal system aims to guide the employee in achieving company's goals. The objective of this study are : 1) to directly analyze the effectiveness of performance appraisal system in influencing work satisfaction, work motivation, and employee performance; 2) to directly analyze the effectiveness of work satisfaction and work motivation in influencing employee performance;3) to indirectly analyze the effectiveness of performance appraisal system in influencing employee performance through work motivation and work satisfaction as the intervening variables. Performance appraisal system is implemented only to the employees with superior position in a company, not to those who are subordinates. Thus, the promotion is not targeted to the individual with the biggest contribution in the process of achieving company's goals. Primary data are collected by distributing questionnaires to the respondents using purposive sampling technique. The sample are consisted of 110 employees of the engineering division at Wringinanom Sugar Factory, Indonesia. Data are analyzed by Structural Equation Modeling (SEM). Results of the study show that the performance appraisal system has a direct and significant effect on work satisfaction, work motivation, and employee performance, and it has an indirect significant effect on employee performance through work motivation and work satisfaction as the intervening variables.https://doi.org/10.26905/jmdk.v6i1.2090]]>
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