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 adjust 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 costly additional information that helps to better explain the performance of their employees. We also find that through supervisors’ collection of costly additional information, the presence of a calibration committee allows supervisors to distinguish between employees based on the variation in underlying performance between employees. We also study the impact of the composition of calibration committees and find 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. Specifically, supervisors are less likely to anchor on their initial ratings and more likely to consider other supervisors’ information about employees to reach a consensus about their evaluations when the HR-manager is present. Our study provides new insights about calibration committees by eliciting behavioral mechanisms that instigate supervisors to make more thorough evaluations.

Keywords: Calibration committees, Subjective performance evaluation, Information collection, Information transfer

JEL Classification: M40, M41