Performance appraisal systems are always of imperative concern of any organization/institution while managing its human resources. Although, higher education institutions depends upon both teaching and non teaching staff working in it, yet major responsibility comes upon teachers who are the source of student’s knowledge, learning and development. Therefore, this need of teachers’ performance management compels these institutions to have systematic performance appraisal systems, in order to administer, evaluate and enhance teacher’s performance. The purpose of this study is to explore various aspects of performance appraisal (PA) systems used for teachers in higher educational institutions (HEIs) and to address the question of how appraisal can play its role in improving performance of teachers in higher education of Pakistan. Researchers have undertaken Public Sector University of Pakistan, as a case study in the present research. A combination of qualitative and quantitative research approach has been adopted which consist of a questionnaire in order to get primary data for investigating different aspects of current performance appraisal system and in-depth interviews in order to study thorough perceptions of teachers regarding performance appraisal approaches in their institution. Findings have shown that obsolete evaluation system, exclusion of students’ feedback, untrained evaluators and decreased motivation for the process are the potential hindering factors for performance appraisal systems of the case study university. Researchers have also explored various suggestive solutions, after discussing the potential concerns of teachers regarding said factors. This study will not only contribute in performance management research but can also be an effective study for considering potential issues and challenges while implementing performance appraisal system in universities of developing countries like Pakistan. Key words: Human resource management (HRM), performance appraisal (PA), performance evaluation, performance planning, higher education commission (HEC), teacher, higher education institutions (HEIs).