Task Assignment, Relative and Absolute Performance Evaluation

44 Pages Posted: 19 Aug 2014

See all articles by Ramji Balakrishnan

Ramji Balakrishnan

University of Iowa - Department of Accounting

Haijin Lin

University of Houston

Shiva Sivaramakrishnan

Rice University

Date Written: August 19, 2014

Abstract

Screening talent to appropriately assign tasks among agents is an important organizational decision. In this paper, we compare the efficacies of absolute and relative performance evaluation systems in identifying agent talent when information asymmetry is present. We identify conditions under which the firm prefers absolute performance evaluation. We also find that relative performance evaluation schemes are more susceptible to performance manipulation activities by agents. These findings support the use of absolute performance evaluation even though such a system discretizes available data by classifying agent output into "performance buckets" such as pass or fail. We discuss empirical implications.

Keywords: Contracting, Agency Theory, Ranking Performance Evaluation

JEL Classification: G32, G34, D82

Suggested Citation

Balakrishnan, Ramji and Lin, Haijin and Sivaramakrishnan, Shiva, Task Assignment, Relative and Absolute Performance Evaluation (August 19, 2014). AAA 2015 Management Accounting Section (MAS) Meeting, Available at SSRN: https://ssrn.com/abstract=2482914 or http://dx.doi.org/10.2139/ssrn.2482914

Ramji Balakrishnan

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0958 (Phone)
319-335-1956 (Fax)

Haijin Lin (Contact Author)

University of Houston ( email )

390F Melcher Hall
Bauer College of Business
Houston, TX 77204-6021
United States
7137437771 (Phone)

Shiva Sivaramakrishnan

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

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