Strategic Manipulation in Peer Performance Evaluation: Evidence from the Field
49 Pages Posted: 6 May 2016 Last revised: 25 Jan 2017
Date Written: January 1, 2017
This study examines strategic behavior in “360-degree” performance appraisal systems, in which an employee is evaluated by her supervisor, subordinate(s), peers (colleagues) and herself. Using proprietary data from a mid-sized Chinese accounting firm, we find that employees manipulate their ratings to peers: they grant better ratings to their less qualified peers while giving poorer ratings to their more qualified peers, compared with evaluations from employees who are not peers. In addition, this manipulation is mostly done by employees who themselves are less qualified. Altogether, this implies that more-qualified employees “lose” from the 360-degree evaluation scheme, and we show that their promotion chances would be (slightly) higher under the traditional “top-down” scheme in which their performance ratings is based only on the appraisal of their superiors. We discuss implications for improving a 360-degree performance evaluation system.
Keywords: peer performance evaluation, strategic manipulation, personnel economics, sabotage, envy, field data
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