DAC Research Seminar - Professor Wim Van der Stede, London School of Economics

Using an event-type field study design with data from a company that implemented changes in its performance evaluation system, we shed light on the dynamics of the performance evaluation process and demonstrate the nuanced ways in which employee self-evaluations impact supervisor performance evaluations, and vice versa. Self-evaluations may be prone to positivity bias, but they also afford supervisors the opportunity to adjust the extent to which they rely solely on their own observations of their employees’ performance. Thus, we first examine the extent to which self-evaluations are informative—that is, whether supervisors do incorporate (arguably biased) employee self-evaluations. We then examine how various factors affect the informativeness of self-evaluations, such as the length of the supervisor-employee working relationship and performance measure verifiability. In the other direction, we document how subordinates adjust their self-ratings based on supervisor feedback, which highlights a dynamic interplay between positivity bias and supervisor trust. Combined, our study provides insights not only into the informativeness of employee self-evaluations despite their purported biases (which have been the predominant focus of prior work), but also into how employee self-ratings and supervisor performance evaluations dynamically interact and adjust.