Performance evaluations systems are a critical part of overall performance management systems. This intensive case study provides insights into how the use of subjective performance evaluations in a complex organisational setting has led to perceptions of injustices (e.g., procedural, distributional, interactional), and unintended consequences. The key injustices were mixed practices, unclear criteria, financial focus, little differentiation between good and poor performers, stickiness in ratings, inequities in target setting, higher ratings at higher grades, and the predetermined theory. The consequences include the lack of trust, generous bonuses, gaming, inability to influence, resource allocation, bonuses are expected and not performance-related, and the system is costly to administrate. Multiple sources of evidence support the findings, and the patterns are consistent over a three year period. Future research needs to develop a deeper understanding of how these parts interrelate, where subjective performance evaluations work, and where they do not work, and to encourage breaking down the divide between functional specialisations (e.g., human resources, accounting).
Conference: PMA Conference, Otago 2009, Otago University, Dunedin, New Zealand
Series: Accountancy Working Paper Series
Series number: 11
Keywords: performance evaluations; incentives; performance management; forced distribution; balanced scorecard; EVA®.
Research Type: Conference or Workshop Item (Paper)