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Challenges of subjectivity in team performance evaluation

Markus Arnold (Faculty of Business, Economics and Social Sciences, University of Bern, Bern, Switzerland)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 18 June 2021

Issue publication date: 4 August 2021

551

Abstract

Purpose

This paper aims to analyze challenges of subjective performance evaluation (SPE) and their effects on team performance. It focuses on discretionary bonus allocations in teams and challenges driven by cognitive biases on the superior or the employee side. This is important as efficient teamwork is a relevant source of competitive advantages in firms, and firms often rely on teams to coordinate various, mutually supportive organizational activities.

Design/methodology/approach

The author analyzes results that have recently been discussed in the literature and link them to each other to create a more holistic picture about potential performance effects of SPE. Based on the analyses, the author develops avenues for future research and point out open questions.

Findings

Exploring employees’ fairness perceptions in team settings in which there is no clear standard for a “fair” team bonus allocation, the author finds that perceived fairness of team bonus allocation may decrease under SPE because employees interpret the “fairness” of the bonus allocation from an egocentric perspective. Such decrease in perceived fairness can eventually even lead to decreased team performance. Likewise, on the superior side, more complex, but highly relevant team can cause cognitive biases of superiors in assessing employee performance, thereby decreasing the potentially positive effects of SPE on team performance.

Originality/value

This paper contributes to the literature by analyzing recently discovered challenges of SPE in teams and linking them to each other to draw more general conclusions about the performance effects of SPE. For practice, my findings imply that firms may want to be cautious when evaluating the potential effects of SPE – as it is made by human beings with their cognitive biases. For research, the paper opens up new research possibilities and points out open questions.

Keywords

Acknowledgements

This paper forms part of a special section “Performance measurement and management”, guest edited by Ralph Adler and Rakesh Pandey.

The author greatly appreciate helpful comments from Ralph Adler, Kai Bauch, David Brown, Gerhard Speckbacher and participants at the 2019 PMAA Conference.

Citation

Arnold, M. (2021), "Challenges of subjectivity in team performance evaluation", Pacific Accounting Review, Vol. 33 No. 1, pp. 20-35. https://doi.org/10.1108/PAR-09-2020-0146

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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