If performance management is poorly implemented, then the organization is likely to face the following consequences:
1. Increased Turnover: If the process is not seen as fair, employees may become upset and leave the organization.
They can leave physically (i.e., quit) or withdraw psychologically (i.e., minimize their effort until they are able to find a job elsewhere).
2. Use of Misleading Information: If a standardized system is not in place, there are multiple opportunities for fabricating information about an employee’s performance.
3. Lowered Self-Esteem: Self-esteem may be lowered if the feedback is provided in an inappropriate and inaccurate way. This, in turn, can create employee resentment.
4. Wasted Time and Money: Performance management systems cost money and quite a bit of time. These resources are wasted when systems are poorly designed and implemented.
5. Damaged Relationships: As a consequence of a deficient system, the relationship among the individuals involved may be damaged, often permanently.
6. Decreased Motivation to Perform: Motivation may be lowered for many reasons, including the feeling that superior performance is not translated into meaningful tangible (e.g., pay increase) or intangible (e.g., personal recognition) rewards.
7. Employee Burn-Out and Job Dissatisfaction: When the performance assessment instrument is not seen as valid, and the system is not perceived as fair, employees are likely to feel increased levels of job burnout and job dissatisfaction.
As a consequence, employees are likely to become increasingly irritated.
8. Increased Risk of Litigation: Expensive lawsuits may be filed by individuals who feel they have been appraised unfairly.
9. Unjustified Demands on Managers and Employees Resources: Poorly implemented systems do not provide the benefits provided by well-implemented systems, yet they still take-up managers’ and employees’ time.
Such systems will be resisted because of competing obligations and allocation of resources (e.g., time).
What is sometimes worse, managers may simply choose to avoid the system altogether, and employees may feel increased levels of overload.
10. Varying and Unfair Standards and Ratings: Both standards and individual ratings may vary across and within units and also be unfair.
11. Emerging Biases: Personal values, biases, and relationships are likely to replace organizational standards.
12. Unclear Rating System: Because of poor communication, employees may not know how their ratings are generated and how the ratings are translated into rewards.