Template-type: ReDif-Paper 1.0
Author-Name: Moers Frank
Author-workplace-name: METEOR
Title: Discretion and Bias in Performance Evaluation: The Impact of Diversity and Subjectivity
Abstract: In this paper, I use a proprietary archival data set of one firm to examine the impact of performance measure diversity and the use of subjective performance measures on performance evaluation bias. The data set used is unique in the sense that it provides detailed information about a number of components of the subordinate-specific incentive contract, such as, the ‘incentive weights’ for both objective and subjective performance measures and the number of objective and subjective performance measures. The empirical results indicate that discretion, due to performance measure diversity and subjectivity, is related to performance evaluation bias. More specifically, I find that increased discretion is related to a compression of performance ratings and more lenient performance ratings. These results suggest that increasing the number of performance measures and using subjectivity in performance evaluation make it more difficult to differentiate among subordinates, which can lead to problems in personnel decisions and future incentives.
Keywords: Economics ; 
Series: Research Memoranda
Creation-Date: 2001
Number: 025
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:aa5abf8a-2697-4fbe-82b8-580b4a4a6319/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 79551
Handle: RePEc:unm:umamet:2001025