Challenges associated with performance management initially include defining andrnunderstanding the term itself. Performance management encompasses the entire processrnof improving and sustaining human performance throughout an organization.rnCollectively, the performance of individuals determines that of teams, departments andrnultimately the entire enterprise.rnThus, the objective of the study was to assess the Effectiveness of PerformancernManagement system of Pact Ethiopia with the major themes of the study beingrnperformance planning, execution, assessment and the uses of the evaluation results. Torncollect necessary information for the purpose of the study, the researcher usedrnquestionnaire, interview, and document review. Questionnaires were distributed to allrn(93) employees based in Addis Ababa out of which 86% were returned. Based on thernreturned questionnaire, descriptive statistics were used to analyze the data. The results ofrnthe analysis shows that, in the performance management practice of the organizationrnthere are some strong areas to be further strengthened and as well as weak areas to bernimproved. Among the weak areas, even though employees were participating in thernperformance planning process goals are not set in measurable terms and employees arernnot clear on what is expected form them, they were not aware of the evaluation standards,rnthey didnâ€™t get appropriate information when things are changed and didnâ€™t get timelyrnfeedback, there is a communication gap, their performance assessment was not based onrnwhat the employees and their supervisors jointly agreed, the evaluation system was not inrna position to identify high performers and underperformers and other related issues werernidentified. Moreover the evaluation results is not used for the intended purpose and otherrnrelated issues were identified. Based on the findings suggestions were forwarded:rnrevising the purpose of the performance evaluation in light of its practical use, improvingrnthe objectivity and measurability of the criteria and giving emphasis for the utilization ofrnthe performance evaluation results for staff development and administrative decisions inrna timely and consistent manner