The present study investigates the influence of performance appraisal on employee motivation and productivity in Turkish forest products industry using a structural equation model. The questionnaires prepared for this purpose were applied to 432 people that work in 14 forest products industry businesses operating throughout Turkey. A total of nine hypotheses were established to determine the relationship between performance appraisal and employee motivation and productivity. The results indicated that five hypotheses were accepted, while four of them were rejected In the light of the findings of this study, it may be generally said that the effect of performance appraisal on employee motivation and productivity was high. In other words, performance appraisal was found to be a major factor on employee motivation and productivity. The present study is expected to help managers and decision makers in selecting suitable motivating factors in order to retain and satisfy their employees. Consequently, this study will fill an important gap in the area of performance appraisal in the forest products industry by structural equation modeling and presents the opportunity for further studies.