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The Impact of Poor Performance Reviews

If done effectively, performance reviews help managers to align and track measurable goals, create ongoing feedback loops for coaching, and boost engagement through recognition. In other words, managing employee performance is basically how work gets done and goals are accomplished.

But we are all busy, and sometimes do not invest the time needed to understand performance reviews and how to use them effectively. This can lead to detrimental organizational outcomes, some of which are shown below.

1. Unclear Reward Systems

Due to poor communication, employees may not understand the link between their behaviors and results, and how those translate into performance ratings. Likewise, employees may not comprehend how their ratings translate into rewards. The absence of clear links makes it unlikely employees will be motivated to perform at a high level.

2. Biased Performance Ratings

While most biases present in performance management are unintentional, managers are more disposed to give biased reviews in the absence of objective performance data usually obtained by conducting effective performance reviews.

The introduction of human biases, such as personal values, ideas or relationships could also lead to unfair treatment. Unfortunately, the employee and manager might not recognize actual performance problems in this situation, leaving issues undiscussed as they continue to affect the organization.

3. Lack of Employee Engagement

Employee engagement is the extent to which employees feel passionate about their jobs, are committed to the organization, and put discretionary effort into their work. Put differently, employee engagement is the emotional commitment the employee has to the organization and its goals.

When performance reviews are poorly conducted, employee engagement can be quickly eroded. For instance, when a performance plan is unclear, employees are unsure how their everyday work contributes to the organization’s mission. There’s no sense of growth or progress—essential ingredients for developing engaged and high-performing employees. Also, if employees see the program as unfair, they are likely to feel uninspired about their future at the organization, experience lower motivation, perform at lower levels, or leave the job altogether.

When you have talented employees, it’s up to the managers to find areas in which they can improve. Options for development include expanding their gifted personnel’s skill set and providing training and support. Talented employees want feedback and it’s the manager’s job to deliver. If they don’t, the organization’s best people will grow complacent and disengaged.

4. Low Employee Self-Esteem

Poor performance reviews lack structure and are more reactive than proactive, meaning that employees will typically only hear from managers when they’ve done something wrong—a common practice that takes a toll on staff confidence. Also, if an employee feels that they are evaluated unfairly, they may lose self-esteem, which is a crucial element to success.

Low self-esteem could create resentment towards management and even the organization as a whole. Showing appreciation, approval and attention to employees with a healthy mix of constructive and positive feedback will make them feel confident in their job and motivate them to perform at even higher levels.

5. Damaged Relationships

Manager-employee relationships are also at risk under weak performance management systems. Employees subject to ineffective systems and performance review practices are likely to feel upset, demoralized, and demotivated. This can lead to personal relationships that are damaged, sometimes permanently.

Generally, a poorly implemented performance reviews could cost your organization in many ways. It will not only fail to build progress toward the organization’s mission, but it could actually have a detrimental effect on the employees’ motivation, relationships, time and energy.

How well do your managers, supervisors, and heads of unit conduct performance reviews?

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