Many companies these days lack detailed documentation for the interaction between management and employee. Not having documentation opens the door for a "he says, she says" situation. Often, many employees sue their employes, and in most cases, these lawsuits end in the employer settling or losing the case. The big question sometimes is: "Is it always fair?". Sometimes it is, sometimes is not. By keeping a well-organized track of documentation, both parties have all the information at a glance. This information provides a clear picture of what is happening and if there is indeed a case or not.
It is a benefit for both employer and employee. The employer can intervene with bad managers on time, which helps them protect their assets. At the same time, the employee can keep track and improve as that way there is no "I forgot it" situation.