Performance management is often seen as a routine HR function—until it begins to fail. When managed poorly, its effects can ripple through a business, leading to disengagement, reduced productivity, and even legal exposure. In the UK, employers must tread carefully, balancing organisational needs with statutory rights under the Employment Rights Act 1996 and ACAS Code of Practice.
The Hidden Cost of Avoidance
Poor performance management often goes unnoticed until it becomes critical. Managers may avoid difficult conversations, delay reviews, or apply standards inconsistently. Over time, this erodes team morale, encourages mediocrity, and fosters resentment among high performers and the rest of the team.
One hidden cost is employee disengagement. Gallup1 data consistently shows that disengaged employees cost companies significantly in lost productivity and this data shows that Global engagement has fallen once again. Additionally, failure to address underperformance can lead to higher turnover—with associated recruitment and onboarding costs.
Another risk is that associated with the legal liability. In the UK, mishandling a performance issue may lead to unfair dismissal claims. If an employee is not given a fair chance to improve—through clear feedback, support, and a structured improvement plans—an employment tribunal could rule against the employer.
How Employers Can Overcome It
To prevent these outcomes, businesses must adopt a proactive and transparent approach. The starting point is setting clear expectations through job descriptions, KPIs, and regular check-ins. Open communication should be part of organisational culture—not just a yearly event.
When performance issues arise, follow a structured performance improvement process, which should align with the ACAS Code of Practice on Disciplinary and Grievance Procedures, which emphasises the need for documented feedback, reasonable timelines, and the opportunity for employees to respond and improve.
Training for line managers is also essential. Many performance management failures stem from a lack of capability, not intent. Ensure that you equip managers with the skills and tools to give constructive feedback and lead performance conversations with confidence.
Strategies to Fix and Future-Proof Performance Management
- Regular One-to-Ones – Frequent conversations foster trust and allow early intervention before issues escalate.
- SMART Objectives – Ensure goals are Specific, Measurable, Achievable, Relevant, and Time-bound.
- Performance Reviews Linked to Development – Focus not just on past results but on the employee’s future potential.
- Use of Technology – Adopt performance management software that enables real-time feedback and tracking.
- Legal Compliance – Always document performance discussions and improvement plans so employees know what is expected of them and managers can use to support in the improvement and development of employees.
Looking ahead, businesses must embrace agile performance management—where feedback is continuous, goals are flexible, and the emphasis is on coaching over control.
This not only improves individual performance but strengthens organisational resilience in a rapidly changing environment.
At View HR we can help to play a vital role in transforming performance management systems. With our external perspective and expertise in employment law, we can help design or refine performance frameworks, coach and train managers on handling underperformance, and ensure procedures are legally sound and aligned with best practice. We can also support in sensitive cases where impartiality is crucial—providing guidance on capability procedures, conducting independent investigations, or advising on settlement agreement strategies where appropriate.
Get in touch today to find out how we can best support you.
