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Performance Appraisals and the Impact of Forced Distribution--An Experimental Investigation

Author

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  • Johannes Berger

    (University of Cologne, 50931 Cologne, Germany)

  • Christine Harbring

    (RWTH Aachen University, 52056 Aachen, Germany; and IZA-Institute for the Study of Labor, 53113 Bonn, Germany)

  • Dirk Sliwka

    (University of Cologne, 50931 Cologne, Germany; IZA-Institute for the Study of Labor, 53113 Bonn, Germany; and CESifo, 81679 Munich, Germany)

Abstract

A real-effort experiment is investigated in which supervisors have to rate the performance of individual workers who in turn receive a bonus payment based on these ratings. We compare a baseline treatment in which supervisors are not restricted in their rating behavior to a forced distribution system in which they have to assign differentiated grades. We find that productivity is significantly higher under a forced distribution by about 6% to 12%. However, the productivity effects are less clear cut when participants have prior experience with the baseline condition. Moreover, a forced distribution becomes detrimental when workers have access to a simple option to sabotage each other. This paper was accepted by Peter Wakker, decision analysis.

Suggested Citation

  • Johannes Berger & Christine Harbring & Dirk Sliwka, 2013. "Performance Appraisals and the Impact of Forced Distribution--An Experimental Investigation," Management Science, INFORMS, vol. 59(1), pages 54-68, June.
    • Handle: RePEc:inm:ormnsc:v:59:y:2013:i:1:p:54-68
    DOI: 10.1287/mnsc.1120.1624
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    More about this item

    Keywords

    performance measurement; forced distribution; forced ranking; motivation; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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