Facing a Calibration Committee: The Impact on Costly Information Collection and Subjective Performance Evaluation

Abstract

Recently, many organizations have installed calibration committees to review and correct subjective performance evaluations of supervisors about their employees. This study uses an experimental setting to examine the impact of calibration committees on supervisor evaluation behavior. We predict and find that a calibration committee instigates supervisors to collect additional costly information that helps to better explain the performance of their employees. We also find that the presence of a calibration committee leads to better differentiated performance evaluations through supervisors’ collection of additional costly information. We also study two different types of calibration committees; those consisting of only supervisors compared to those with both supervisors and a third party in the form of a HR-manager. Our results reveal that the presence of a third party (i.e. HR-manager) in the calibration committee leads to better information transfer during discussion in the calibration committee such that supervisors are more likely to consider other supervisors’ information about employees to reach a consensus about their evaluations. Our study opens the black box of calibration committees by eliciting behavioral mechanisms that instigate supervisors to make more thorough evaluations.

Keywords: Calibration committees, Subjectivity, Information collection, Information transfer, Differentiated performance evaluations

JEL Classification: M40, M41