Effects of Subjectivity and Goal Difficulty on Performance

Abstract

Subjectivity is often employed by organizations when evaluating performance and assigning rewards. However, research examining the performance effects of using subjectivity under varying circumstances is limited. To address this gap in the literature, we examine the performance effects of using subjectivity to ex post filter out uncontrollable events that make the attainment of an ex ante performance goal more difficult. We predict that employing subjectivity will have positive effects on performance when the ex ante goal is moderately difficult, but not when it is highly difficult. We also predict that these effects will be mediated by individuals’ perceptions of procedural justice, and their expectancy of goal attainment. Results from an experiment completed by 142 undergraduate students support all predictions. Our findings contribute to the existing literature by showing that the beneficial effects of subjectivity, as employed in our setting, depend on the attainability of the ex ante performance goal. Employing subjectivity when goals are moderately difficult leads to positive outcomes but not when they are highly difficult. Moreover, we also find that these effects spillover to periods where subjectivity was not employed suggesting strong and lingering behavioral consequences. Implications for future research and practice are discussed.

Keywords: subjectivity, goal difficulty, performance

JEL Classification: M52