Organizational climate plays a vital role in influencing motivation and performance of employees. It is important that a positive work climate has been created in the organization.  Creation of a favorable work environment by the management is possible only if it understands the changing scenario of the global business world, growing awareness among employees on different issues concerning employment, intensify of competition among the producers and marketers. The present study aims at identifying those significant factors that contribute to motivation and performance of employees working in both public and private sector transport undertakings of Himachal Pradesh. The present study aims to evaluate the significant factors that have contributed to motivation and performance of employees of transport undertakings in Himachal Pradesh from the period 2012-2017. Both primary data has been used to study the objectives. It is collected from the sample of 600 employees of both transport undertakings through judgment and quota sampling. The questionnaire was prepared for the collection of data. To meet the objective of the study, a five-point Likert scale has been developed for certain identifying variables. These statements on five-point scale areas i.e., (1) strongly disagree (2) Disagree (3) undecided (4) agree (5) strongly agree. On the basis of responses from employees of transport undertakings factor analysis has been done to extract the factors from observed variables which affects the motivation and performance of employees.