Subjective performance evaluations and employee careers

Abstract

Employees who work in complex environments are often evaluated by their supervisors. Data on these evaluations promise to be valuable for analyzing career dynamics and human resources practices. However, existing literature on subjective evaluations is based on data from individual firms. Furthermore, how supervisors evaluate workers and how firms use these evaluations might vary substantially with context, precisely because these evaluations are subjective. Thus, little is known regarding whether findings from single-firm studies generalize to broader settings. We examine personnel data from six large companies and establish how subjective performance ratings correlate with objective career outcomes. We find many similarities across firms in how these ratings correlate with base pay, bonuses, promotions, demotions, separations, quits, and dismissals and cautiously propose these as empirical regularities.