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Is There A Cost To Poor Performance Management and Employee Reviews?
The cost of doing performance management and employee reviews incorrectly is something that many managers, HR professionals and companies never consider. It's too bad. Yes, there is a cost, and a very heavy cost, to doing things badly in the area of appraising employee performance, or not managing performance properly.
Poor performance management practices incur direct costs through loss in productivity that happens when performance problems are not addressed quickly. For example, a manager who only reviews employee performance once a year, and rarely talks to employees about performance through the year is likely to have huge inefficiencies. If the problems were discovered and addressed during the year, many of those producitivy problems could be eliminated.
Other costs occur, too. Employees subjected to poor performance management and performance review practices are likely to get upset, angry, demoralized and demotivated. They start to believe that managers aren't serious about performance, or, even worse, are trying to find people to blame for performance problems.
Further, employee performance reviews that tend to put the employee and the manager on opposite sides of the table push employees into not communicating with managers during the year. Why would an employee come to a manager with a problem, if the employee believes the manager will use that information to blame the employee later on. The result is the manager gets less information, and can't make good business decisions, due to that lack of information.
It may, in fact, be true, that a poor performance management system is worse than no performance management system.
See Also: Performance Management Master Checklist. Doing performance management properly requires that all of the performance management steps be done properly. The Performance Management Master Checklist is a handy tool to use to ensure that all the steps get done.