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

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 were not restricted in their rating behavior to a forced distribution system in which they had to assign differentiated grades. We find that productivity was significantly higher under a forced distribution by about 8%. But also in the absence of forced distribution, deliberate differentiation positively affected output in subsequent work periods.performance measurement, forced distribution, motivation, experiment

The Current State of Performance Appraisal Research and Practice: Concerns, Directions, and Implications

On the surface, it is not readily apparent how some performance appraisal research issues inform performance appraisal practice. Because performance appraisal is an applied topic, it is useful to periodically consider the current state of performance research and its relation to performance appraisal practice. This review examines the performance appraisal literature published in both academic and practitioner outlets between 1985 and 1990, briefly discusses the current state of performance appraisal practice, highlights the juxtaposition of research and practice, and suggests directions for further research

Research and Applications of the Processes of Performance Appraisal: A Bibliography of Recent Literature, 1981-1989

[Excerpt] There have been several recent reviews of different subtopics within the general performance appraisal literature. The reader of these reviews will find, however, that the accompanying citations may be of limited utility for one or more reasons. For example, the reference sections of these reviews are usually composed of citations which support a specific theory or practical approach to the evaluation of human performance. Consequently, the citation lists for these reviews are, as they must be, highly selective and do not include works that may have only a peripheral relationship to a given reviewer\u27s target concerns. Another problem is that the citations are out of date. That is, review articles frequently contain many citations that are fifteen or more years old. The generation of new studies and knowledge in this field occurs very rapidly. This creates a need for additional reference information solely devoted to identifying the wealth of new research, ideas, and writing that is changing the field

Rewarding Carrots & Crippling Sticks: Eliciting Employee Preferences for the Optimal Incentive Mix in Europe

A ranking of a variety of incentive devices used by firms according to their perceived effectiveness by employees is identified. The determinants of employee incentive preferences are also investigated, suggesting a ‘menu’ of conditions under which an organization’s personnel policies will have maximum motivational impact on its workforce. Based on the beliefs of a unique sample of workers from seven European countries, the results suggest that (a) the primary determinant of the level of employee effort is the amount of discretion offered at work; (b) pay incentives and ‘gift exchanges’ are the most important motivators; (c) the use of monitoring and Taylor-type assembly lines are the least effective incentives; and (d) the optimal design of incentive strategies by firms is strongly shaped by a host of contextual factors. The expressed desire for autonomy, and distaste for control, by employees gives credibility to the “participative” management approach.Incentives, effectiveness, effort, attitudes, employees

Differentiation and Performance: An Empirical Investigation on the Incentive Effects of Bonus Plans

It is often claimed that supervisors do not differentiate enough between high and low performing employees when evaluating performance. The purpose of this paper is to study the incentive effects of this behavior empirically. We first show in a simple model that the perceived degree of past differentiation affects future incentives. We then study the impact of differentiation empirically with a large panel data set spanning many firms in one industry. On average, stronger differentiation has a substantial positive effect on performance. This effect is larger on higher hierarchical levels. But differentiation may become harmful at the lowest levels.bonus payments, differentiation, subjective performance evaluation, incentives

Where all the Children are Above Average: A Meta analysis of the Performance Appraisal Purpose Affect

More than 40 years ago, Taylor and Wherry (1951) hypothesized that performance appraisal ratings obtained for administrative purposes, such as pay raises or promotions, would be more lenient than ratings obtained for research, feedback, or employee development purposes. However, research on appraisal purpose has yielded inconsistent results, with roughly half of such studies supporting this hypothesis and the other half refuting it. To account for those differences, a meta-analysis of performance appraisal purpose research was conducted with 22 studies and a total sample size of 57,775. Our results support Taylor and Wherry\u27s hypothesis as performance evaluations obtained for administrative purposes were, on average, one-third of a standard deviation larger than those obtained for research or employee development purposes. In addition, moderator analysis indicated larger differences between ratings obtained for administrative and research purposes when performance evaluations were made in field settings, by practicing managers, and for real world subordinates. Implications for researchers and practitioners are discussed

More than a feeling: A unified view of stress measurement for population science.

Stress can influence health throughout the lifespan, yet there is little agreement about what types and aspects of stress matter most for human health and disease. This is in part because "stress" is not a monolithic concept but rather, an emergent process that involves interactions between individual and environmental factors, historical and current events, allostatic states, and psychological and physiological reactivity. Many of these processes alone have been labeled as "stress." Stress science would be further advanced if researchers adopted a common conceptual model that incorporates epidemiological, affective, and psychophysiological perspectives, with more precise language for describing stress measures. We articulate an integrative working model, highlighting how stressor exposures across the life course influence habitual responding and stress reactivity, and how health behaviors interact with stress. We offer a Stress Typology articulating timescales for stress measurement - acute, event-based, daily, and chronic - and more precise language for dimensions of stress measurement

Incentivizing Creativity in Virtual Groups

Creativity is the key element of organizational success. Yet, adequately incentivizing people to be creative remains a problem without uniform solution. This study investigates the effect of incentive systems that rely on supervisor discretion on creativity of virtual groups. Adopting Social Interdependence Theory, we experimentally assess the effect of forced distribution rating systems (FDRS) and unrestricted distribution rating systems (UDRS) on idea generation and idea selection of groups collaborating in a virtual setting. We show that the competitive FDRSs – in which not every group member can obtain a top ranking - enhance idea generation, idea selection and overall creativity of virtual groups. We contribute to the literatures on creativity, virtual collaboration and incentive systems

EXPLORING EMPLOYEES’ PERCEIVED FAIRNESS AND EFFECTIVENESS OF THE PERFORMANCE APPRAISAL PROCESS AND THE INFLUENCE ON EMPLOYEE RETENTION

The purpose of this study is to explore employees’ perceived fairness and effectiveness of the performance appraisal process and the influence on employee retention. This study is based on a review of existing literature on performance management strategies. Drawing upon equity theory (Adams, 1963), human capital theory (Becker 1962, 1993), organizational justice theory (Greenberg, 1987), and expectancy theory (Vroom, 1964), the researcher explores talent management concepts to reveal the influence of employees’ perceptions of performance appraisals on employee retention. Collectively the theories form a theoretical framework highlighting the importance of Human Capital Development, including the effectiveness of performance appraisals, effective people management, talent development, and employee perceptions in the workplace. This qualitative study utilizes interpretive phenomenological analysis to reveal employees’ perceived fairness and effectiveness of performance appraisals. The data analysis reveals five themes which are process effectiveness, supervisor relationship, fairness, purpose, and intent to stay. This research may help leaders to improve performance appraisal effectiveness and employee retention. Findings suggest that employees’ perceived value, relationships with supervisors, and justice influence perceptions of the performance appraisal process and retention. Recommendations are offered for leaders and supervisors that influence performance appraisal processes and outcomes within the organization

Excludability: A laboratory study on forced ranking in team production

Exclusion has long been employed as a common disciplinary measure against defectors, both at work and in social life. In this paper, we study the effect of excludability - exclusion of the lowest contributor - on contributions in three different team production settings. We demonstrate theoretically and experimentally that excludability increases contributions. Excludability is particularly effective in production settings where the average or maximum effort determines team production. In these settings, we observe almost immediate convergence to full contribution. In settings where the minimum effort determines team production, excludability leads to a large increase in contributions only if the value of the excluded individual's contribution to the public good is redistributed among the included individuals