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Subjective Evaluation of Performance Through Individual Evaluation Interview: Empirical evidence from France

  • Marc-Arthur Diaye
  • Nathalie Greenan
  • Michal Urdanivia

Individual evaluation interviews have become a widespread practice. 52% of employees in French manufacturing firms over 50 employees declared an annual individual evaluation interview in 1997. However whereas the problem of constructing an optimal contract with subjective evaluation (which is defined simply as a signal in most papers) receives a large attention, firm-level evaluation interviews are strikingly left aside from economic analysis. This paper aims at identifying the underlying logics of individual evaluation interviews in the case of individual production and of team production. Especially, it aims at analyzing the relationships between effort, wage distribution within the firms and individual evaluation interviews. From a theoretical standpoint, three papers by Alchian and Demsetz (1972), by Che and Yoo (2001) and by MacLeod (2003) are closely related to our paper and from an empirical point of view, a paper by Engellandt and Riphahn (2004). Our theoretical analysis allows to derive testable predictions regarding the effect of individual evaluation interviews on productive and cognitive effort, on work overload and on wage setting. Using a matched employer / employee survey on computerisation and organisational change (COI), we are able to test part of these predictions and to corroborate them. First, evaluation interviews have a positive impact on productive and cognitive effort. Second, evaluation interviews increase effort through two effects: the classical incentive effect and also a selection effect. Third, the selection effect is stronger in the case of individual production compared with the case of team production. Fourth, evaluated employees earn more than employees in a classical incentive scheme and fifth, evaluated workers have a better knowledge of the rules driving wage setting.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12979.

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Date of creation: Mar 2007
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Handle: RePEc:nbr:nberwo:12979
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  1. Marc-Arthur Diaye & Nathalie Greenan & Michal W. Urdanivia, 2006. "Subjective evaluation of performance through individual evaluation interview : theory and empirical evidence from France," Cahiers de la Maison des Sciences Economiques b06061, Université Panthéon-Sorbonne (Paris 1).
  2. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  3. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
  4. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  5. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  6. Che,Y.K. & Yoo,S.W., 1998. "Optimal incentives for teams," Working papers 8, Wisconsin Madison - Social Systems.
  7. Bentley MacLeod, 2001. "Optimal Contracting with Subjective Evaluation," Theory workshop papers 357966000000000036, UCLA Department of Economics.
  8. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  9. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  10. Patricia Crifo & Marc-Arthur Diaye & Nathalie Greenan, 2004. "Pourquoi les entreprises évaluent-elles individuellement leurs salariés ?," Économie et Prévision, Programme National Persée, vol. 164(3), pages 27-55.
  11. repec:eme:rlepps:v:18:y:1999:i:1999:p:177-242 is not listed on IDEAS
  12. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
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