Capital Ideas is now Chicago Booth Review but unfortunately original articles are no longer available. If you click through you will be taken to the Internet Archive site to find an archived copy.
Subjective evaluation by supervisors can address the shortcomings of numeric measures. When numeric measures focus employees on one goal, a second, subjective bonus can make employees pay more attention to other objectives that may be difficult to quantify, like managing controllable risks. If a plant manager’s bonus depends on profits alone, he might postpone maintaining equipment. A supervisor can motivate the plant manager to consider the longer-run profitability of the machines if part of the bonus is discretionary.
A subjective review can also help deter manipulation if employees know their supervisors will assess them beyond numeric targets. If a supervisor suspects that an employee has manipulated a performance measure, the employee will be penalized accordingly. Foreseeing this may deter such manipulation in the first place.
Authors: Hal Weitzman, Michael Gibbs, Vanessa Sumo
Source: Capital Ideas
Subjects: Human Resources, Management, Organizational Behavior
Click to Add the First »