Cottee believes that this will only have a negative effect on the Upton Park outfit's fortunes.
He told talkSPORT: "I don't think it achieves anything at the moment. Sam came into the club at a time when they needed stability.
"They needed to get out of the Championship after the debacle of Avram Grant and his job was to get them promoted. He did that and did it very well.
"They've been very stable in the Premier League up until the last month or so, and I think Sam has done a good job.
"I don't go along with, 'we're waiting to see what happens', because the club needs stability and you need a manager to take the club forward.
"It doesn't help the manager and Neil McDonald, the assistant manager. They haven't been given contracts. They've not even had talks and that doesn't help the management and I think that can filter down to the players as well.
"If you're trying to get a player to sign a new contract, a player will say, 'hold on, I don't know if the manager is going to be here'."