Review of Managerial Science

, Volume 7, Issue 2, pp 141–157 | Cite as

Social ties and subjective performance evaluations: an empirical investigation

Original Paper

Abstract

We empirically investigate possible distortions in subjective performance evaluations. A key hypothesis is that evaluations are more upward biased the closer the social ties between supervisor and appraised employee. We test this hypothesis with a company data set from a call center organization which contains not only subjective assessments but also several more objective measures of performance. Controlling for these performance measures, we find strong evidence that evaluations are upwards biased in smaller teams and some evidence that supervisors give better ratings to employees they themselves have evaluated before.

Keywords

Subjective performance evaluation Bias Social ties Team size Favoritism 

Mathematics Subject Classification

62H12 62J05 

References

  1. Abbink K, Irlenbusch B, Renner E (2006) Group size and social ties in microfinance institutions. Econ Inq 44:614–628Google Scholar
  2. Baiman S, Rajan M (1995) The informational advantage of discretionary bonus schemes. Account Rev 70:557–579Google Scholar
  3. Baker G, Gibbons R, Murphy KJ (1994) Subjective performance measures in optimal incentive contracts. Q J Econ 109:1125–1156CrossRefGoogle Scholar
  4. Baumeister RF, Leary MR (1995) The need to belong: Desire for interpersonal attachments as a fundamental human motivation. Psychol Bull 117(3):497–529CrossRefGoogle Scholar
  5. Berger J, Harbring C, Sliwka D (2010) Performance appraisals and the impact of forced distribution: an experimental investigation. IZA working paper nr 5020, pp 1–44Google Scholar
  6. Bol JC (2011) The determinants and performance effects of managers performance evaluation biases. Account Rev 86:1549–1575CrossRefGoogle Scholar
  7. Brandts J, Sol C (2010) Personal relations and their effect on behaviour in an organizational setting: an experimental study. J Econ Behav Organ 73(2):246–253CrossRefGoogle Scholar
  8. Cardy RL, Dobbins GH (1986) Affect and appraisal accuracy: liking as an integral dimension in evaluating performance. J Appl Psychol 71(4):672–678CrossRefGoogle Scholar
  9. Engellandt A, Riphahn RT (2011) Evidence on incentive effects of subjective performance evaluations. Indus Labor Relat Rev 64(2):241–257Google Scholar
  10. Gibbs M, Merchant KA, van der Stede WA, Vargus ME (2003) Determinants and effects of subjectivity in incentives. Account Rev 79:409–436CrossRefGoogle Scholar
  11. Glaeser EL, Laibson DI, Scheinkman JA, Soutter CL (2000) Measuring trust. Q J Econ 115:811–846CrossRefGoogle Scholar
  12. Hsiao C (2003) Analysis of panel data. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  13. Jawahar I, Williams C (1997) Where all the children are above average: the performance appraisal purpose effect. Person Psychol 50:905–925CrossRefGoogle Scholar
  14. Kane JS, Bernardin HJ, Villanova P, Peyrefitte J (1995) Stability of rater leniency: three studies. Acad Manag J 38(4):1036–1051CrossRefGoogle Scholar
  15. Kingstorm PO, Mainstone LE (1985) An investigation of the rater-ratee acquaitance and rater bias. Acad Manag J 28(3):641–653CrossRefGoogle Scholar
  16. Landy FJ, Farr JL (1980) Performance rating. Psychol Bull 87:72–107CrossRefGoogle Scholar
  17. Lefkowitz J (2000) The role of interpersonal affective regard in supervisory performance ratings: a literature review and proposed causal model. J Occup Organ Psychol 73(1):67–85CrossRefGoogle Scholar
  18. Milkovich GT, Wigdor AK (1991) Pay for performance. National Academy Press, Washington, DCGoogle Scholar
  19. Moers F (2005) Discretion and bias in performance evaluation: the impact of diversity and subjectivity. Account Organ Soc 30:67–80CrossRefGoogle Scholar
  20. Murphy KJ (1992) Performance measurement and appraisal: Motivating managers to identify and reward performance. In: Burns WJJ (ed) Performance measurement, evaluation, and incentives. Harvard Business School Press, Boston, pp 37–62Google Scholar
  21. Murphy KR, Cleveland JN (1995) Understanding performance appraisal. Sage, Thousand OaksGoogle Scholar
  22. Prendergast CJ (1999) The provision of incentives in firms. J Econ Lit 37:7–63CrossRefGoogle Scholar
  23. Prendergast CJ (2002) Uncertainty and incentives. J Labor Econ 20:115–137CrossRefGoogle Scholar
  24. Prendergast CJ, Topel RH (1993) Discretion and bias in performance evaluation. Eur Econ Rev 37:355–365CrossRefGoogle Scholar
  25. Prendergast CJ, Topel R (1996) Favoritism in organizations. J Polit Econ 104:958–978CrossRefGoogle Scholar
  26. Van Praag B, Ferrer-i Carbonel A (2004) Happiness quantified: a satisfaction calculus approach. Oxford University Press, OxfordCrossRefGoogle Scholar
  27. Varma A, Denisi AS, Peters LH (1996) Interpersonal affect and performance appraisal: a field study. Person Psychol 49(2):341–360CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.Faculty of Management, Economics and Social Sciences, Seminar of Personnel Economics and HRMUniversity of CologneCologneGermany
  2. 2.Institute for Applied MicroeconomicsUniversity of BonnBonnGermany

Personalised recommendations