This paper identifies the main problems and challenges of organizational performance management systems. After analyzing these shortcomings and the complexity of the performance appraisal process, the study provides a detailed presentation of a successful performance management system thanks to a management innovation developed and implemented by Schneider Electric. This management innovation effectively succeeds to introduce a performance management systems which eliminates the problems related with low employee empowerment and motivation, providing a clear definition and measurement of performance, and an organic inter-relation between various organizational functions and hierarchical levels.
