The determinants and performance effects of managers' performance evaluation biases
3 important questions on The determinants and performance effects of managers' performance evaluation biases
Why will performance evaluation likely to be incomplete when information-gathering costs are high?
To make unbiased subjective assessments, managers need to invest time and effort in gathering information on employee performance --> Can be costly --> Requires time --> Since managers have a preference to limit their time and effort spend on performance evaluation, performance evaluation will likely to be incomplete when information gathering costs are high.
Explanation: information-gathering costs positively affect centrality bias
Lack of information -> leniency bias -> when employees are unsatisfied with their rating, they will lekely ask their managers for a justification of the performance rating they have received -> time-consuming process -> managers have incentives to avoid these discussion --> also: defensive mechanism to avoid ramifications of deserved, but though performance ratings
How is ratings behavior influenced?
Rating behavior is influenced by personal relationships and fear of criticism -> fear it will hurt the relationship with the employee
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