Cost of poor performance management system to an organization


An essential procedure that is crucial to an organization's success is performance management. To increase productivity and meet organizational goals, it entails creating goals, evaluating performance, giving feedback, and developing plans. However, a corporation may suffer greatly as a result of inadequate performance management methods (Kakkar et al. 2020). The expense of a subpar performance management system to a business will be examined in this essay.

  • Loss of productivity

Productivity loss is one of the biggest consequences of a bad performance management system. Not knowing the mistakes and the lacking areas on the way employees work they cannot improve of be creative in their performance and being stuck in the comfort zone make employees to be less productivity and less motivated to try out new things. The demotivation might lead employees to resign from the work which will result losing of valuable resources to the company.

  • Low staff morale

Low staff morale might result from a bad performance management system. Employee unhappiness and disengagement may result if they don't receive feedback or acknowledgement for their efforts. Increased turnover and absenteeism may follow, both of which could be expensive for the company.

  • Increasing legal liability

A badly managed performance management system may subject a company to legal liability. A lawsuit for wrongful termination or discrimination may be filed against the corporation if an employee is let go or demoted without sufficient justification or following the right processes. According to the laws the employees are entitles to a proper performance management system and that should be adhered by the companies.

  • Missing opportunities

Missed chances for the organization might also result from a subpar performance management system. Employee underperformance may cause the organization to lose out on prospects for expansion or new business. Additionally, if workers are not properly trained or developed, they can lack the abilities needed to seize new chances.

  • Dissatisfaction of the customers of the organization

Customer satisfaction may be negatively impacted by a subpar performance management system. Customers may get disappointed if employees are not giving their utmost effort, which can lower the quality of the goods or services offered. Losses in revenue and the organization's reputation could result from this (Cardy & Leonard 2011).

An organization could suffer significant repercussions from a subpar performance management system. Reduced consumer satisfaction, low employee morale, higher legal responsibility, and decreased productivity are all possible consequences. To maintain the success and longevity of their operations, firms must invest in efficient performance management systems.

 

References

  • Cardy, R & Leonard, B 2014, Performance Management: Concepts, Skills and Exercises: Concepts, Skills and Exercises, Routledge.
  • Kakkar, S, Dash, SS, Vohra, N & Saha, S 2020, “Engaging employees through effective performance management: an empirical examination,” Benchmarking: An International Journal, 27(5):1843–1860.

Comments

  1. Udeshika Wanninayake1 May 2023 at 18:58

    The potential outcomes for an organization when its employees become less productive and motivated due to a poor performance management system, including the possibility of valuable resources leaving the company?

    ReplyDelete

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