The performance appraisal is a critical process within a business that is meant to engage, motivate, and increase performance of employees. However, the current and typical format, structure, and application of performance appraisals do not lead to these desired outcomes. This is because the performance appraisal is structured in way that emphasizes the need to fix performance issues and dissolve weaknesses. Positive psychology studies optimal human functioning and finds that it is equally important, if not more important to focus on discovering, using, and developing strengths in order to flourish, than it is to diminish weaknesses. Therefore, positive psychology should be used to strategically increase the effectiveness and value of the performance appraisal process within an organization. By using positive psychology research on strengths, engagement, goal-setting, motivation, meaning in work, and leadership, the performance appraisal can be structured and facilitated in a way that leads to high engagement and motivation for the employee, ultimately enhancing their performance and creating organizational success.