Calibration in the Performance Evaluation Process

ABSTRACT

In this research, we examine the common practice of employee performance rating calibration, the process in which calibration committee members discuss, compare, and potentially adjust direct supervisors' initial employee performance ratings. Calibration introduces an additional step into the performance evaluation process aimed at correcting for any incompleteness, inconsistencies, or biases in the ratings. By empirically studying archival, survey, and demographic data from 737 employees and 114 direct supervisors from our participating company, we examine the incentive conflicts between direct supervisors and the remainder of the calibration committee and their effect on the calibration process outcomes. We predict and find evidence consistent with direct supervisors being strategic in the information they share in the calibration process, which results in reduced information sharing. We also examine whose ratings are adjusted. While there is pressure on calibration committees to make sufficient adjustments, not every supervisor's employee performance ratings need to be adjusted. We find that those direct supervisors who have lower costs associated with avoiding scrutiny and defending against adjustments in the calibration process, ceteris paribus, receive fewer adjustments and end up with higher ratings, even when controlling for employee performance. Our investigation sheds light on the complexities of the calibration process, thereby providing important insights to HR managers responsible for managing the process.