How do managers evaluate individual contributions to team production? A theory and empirical test

Research Summary Organizations rely on subjective evaluations to reward employees for team‐based performance. However, it is unclear how supervisors determine individuals' contributions to collective output. We theorize that supervisors rely on the covariance between employees' presence and their teams' productivity. If teams are more productive when an employee is present, the supervisor may infer a greater contribution from the employee. Using data from a manufacturing firm, we find that covariation between an employee's presence and her team's output has a positive effect on her evaluation. This relationship is stronger when supervisors have more opportunities to observe an employee across various teams and when the employee has more authority to direct team production, supporting counterfactual information as an important component of evaluations for individuals engaged in team production. Managerial Summary It is notoriously difficult to evaluate the individual performance of employees when the only available metric is team‐based output. We suggest that supervisors help solve this problem by observing how team output correlates with changes in team membership. We construct a measure of the covariance between an employee's presence in a team and the team's productivity, and find a positive relationship between this measure and the employee's annual subjective performance evaluation. Our results indicate that subjective evaluations reflect individual contributions to team production fairly well for employees who (a) have sufficient authority to direct team production and (b) are frequently rotated beyond a single team. We discuss what kinds of organizations might benefit from this measure as an input to their performance evaluation processes.