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Subjective Performance Evaluations and Employee Careers

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  • Frederiksen, Anders

    ()
    (Aarhus University)

  • Lange, Fabian

    ()
    (Yale University)

  • Kriechel, Ben

    ()
    (Economix Research & Consulting)

Abstract

Firms commonly use supervisor ratings to evaluate employees when objective performance measures are unavailable. Supervisor ratings are subjective and data containing supervisor ratings typically stem from individual firm level data sets. For both these reasons, doubts persist on how useful such data are for evaluating theories in personnel economics and whether findings from such data generalize to the labor force at large. In this paper, we examine personnel data from six large companies and establish how subjective ratings, interpreted as ordinal rankings of employees within narrowly defined peer-groups, correlate with objective career outcomes. We find many similarities across firms in how subjective ratings correlate with earnings, base pay, bonuses, promotions, demotions, separations, quits and dismissals and cautiously propose these as empirical regularities.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6373.

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Length: 42 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6373

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Related research

Keywords: subjective performance ratings; personnel data; employee careers; career outcomes; incentives; employer learning;

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References

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  1. Gadi Barlevy & Derek Neal, 2011. "Pay for Percentile," NBER Working Papers 17194, National Bureau of Economic Research, Inc.
  2. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 30(1), pages 91 - 147.
  3. Thomas J. Dohmen & Ben Kriechel & Gerard A. Pfann, 2004. "Monkey bars and ladders: The importance of lateral and vertical job mobility in internal labor market careers," Journal of Population Economics, Springer, Springer, vol. 17(2), pages 193-228, 06.
  4. Anders Frederiksen & Előd Takáts, 2011. "Promotions, Dismissals, and Employee Selection: Theory and Evidence," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 27(1), pages 159-179.
  5. Ichino, A. & Flabbi, L., 1998. "Productivity, Seniority and Wages. New Evidence form Personnel Data," Economics Working Papers, European University Institute eco98/11, European University Institute.
  6. Medoff, James L & Abraham, Katharine G, 1980. "Experience, Performance, and Earnings," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 95(4), pages 703-36, December.
  7. Frederiksen, Anders, 2010. "Earnings Progression, Human Capital and Incentives: Theory and Evidence," IZA Discussion Papers 4863, Institute for the Study of Labor (IZA).
  8. Robert Gibbons & Michael Waldman, 1999. "A Theory Of Wage And Promotion Dynamics Inside Firms," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(4), pages 1321-1358, November.
  9. Orana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social preferences and the response to incentives: Evidence from personnel data," Natural Field Experiments, The Field Experiments Website 00212, The Field Experiments Website.
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Cited by:
  1. Brown, Meta & Setren, Elizabeth & Topa, Giorgio, 2014. "Do Informal Referrals Lead to Better Matches? Evidence from a Firm's Employee Referral System," IZA Discussion Papers 8175, Institute for the Study of Labor (IZA).

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