Implementing a poorly designed performance management system can create significant challenges for organizations. First, such a system may increase employee turnover if the process is perceived as unfair, leading employees to disengage or leave the company altogether. Second, it can lower self$-$esteem when feedback is delivered poorly, leaving employees feeling undervalued and decreasing their motivation to contribute. Third, it can damage critical relationships between managers, employees, and even customers, as mistrust and frustration replace collaboration. Finally, a flawed system increases the risk of litigation when employees perceive evaluations as biased or discriminatory, prompting legal action. According to Aguinis $(2023),$ an effective performance management system must be fair, transparent, and aligned with organizational goals to prevent these risks and to foster trust, development, and engagement across the workforce.

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