The study aims to examine the effect of performance appraisal process on employeernperformance improvement in the case of Ethiopian Management Institute. The objectivernof the study is to examine the effect of performance appraisal process on employeeâ€™srnperformance improvement. The research is explanatory type and the study usedrnquantitative approaches. Primary data were integrated to be able to provide adequaterndiscussion and to get current information about what has already been discovered. Thernsampling technique that the researcher used in addressing the research problem wasrnprobability and stratified random sampling. The sample for the study was consisted of 93rnrespondents. The data collection instrument for this study was questionnaire. Surveyrninstruments developed in this study were structured questionnaire that contained 34rnitems. Data was analyzed using descriptive statistics (percentage, mean and standardrndeviation) and inferential statistics (t-test, anova-test, correlation and multiple regressionrnanalysis). The findings of the descriptive analysis revealed that there is a wide gap in thernapplication of all the components of performance appraisal process such as, establishingrnperformance targets/standards, communicating established standards, appraisalrnprocess/measuring actual performance/, discussing the appraisal results with thernemployee and giving feedback and initiating corrective action. It implies thatrnperformance appraisal programs should relate to the theoretical issues of managingrnappraisals in order to utilize and improve employeeâ€™s performance improvement. Thus,rnthis study recommends the appraisal system to be standardized and communicated. Thernstudy also recommends strengthen capacity building programs on appraisal system.