The Risks Of Ineffective Performance Management
Performance management is unarguably one of the most effective HRM functions that significantly influence organisational productivity. It is also a factor that affects employee satisfaction, engagement and retention within an organisation. A strong, continuous and effective performance management system helps an organisation align, track and measure goals. Backing up this process with ongoing feedback, coaching and recognition can successfully direct the overall workforce of an organisation towards the achievement of a company’s vision and mission.
The development of information and technology has given rise to advanced HR systems that can tackle a successful performance management process within organisations. However, some firms still lag behind in designing and executing an effective performance management system, which unfortunately poses several risks to an organisation. In this article, we will talk about these risks that arise as a result of poor performance management.

Employees Could Quit Or Disengage
When employees are unfairly assessed due to an ineffective performance management system, it easily offends them and makes them feel unappreciated. As a result of this, one of two things is sure to happen: one is that employees will leave the company and promote bad word-of-mouth to your brand outside, and the second is that although they may not leave, they will become withdrawn and disengaged, which will highly affect organisational productivity. When it comes to bad word of mouth, an organisation’s reputation is highly damaged and will even reduce the potential to attract talented candidates in the future.
Resources Are Wasted
Performance management is an integrated process that calls for attention to data to arrive at fair conclusions, which consumes a great deal of time. Besides, the case of hiring an HR professional or executing an HR system to conduct this process, also calls for a certain financial investment. When a performance management system is poorly designed or executed, it makes these resources (time and money) a mere waste with no results produced. Apart from affecting the HRM department, such occurrences also create a huge loss of financial resources, which could have otherwise been used on other value-adding initiatives of the business.
Legal Risks Increase
Poor performance management with no data, backup claims, or proof is extremely dangerous and can put your business at legal risk. This is because an employee who feels they are mistreated or not reviewed fairly according to their performance can take legal action against your company.
Doing this will then put your band under legal compliance, lawsuits, and in worse cases under expensive fines or restrictions. This creates a financial weight on your company and has the potential to tarnish the reputation and trust stakeholders have in your company. Most importantly, it makes your company the least attractive to potential candidates in the future, reducing the competitive nature of your future workforce.
If you’re looking to integrate an effective performance management process within your organisation that will confidently keep away all the above-discussed risks, consider a system replacement. At Yomly, one of the leading HR cloud-based software solution providers in the UAE, all our HR systems are precisely designed to meet the highest level of quality, performance and satisfaction.