Search results

Relative performance evaluation (RPE) is a widely practiced employee appraisal process in the services industry. In a global delivery model, teams are spread across different geographical locations. The team members work on various tasks under the guidance of different managers and at times under more than one manager for performing the same task. Such complexities make RPE of the team members quite challenging. The paper proposes a methodical step-by-step approach to simplify the evaluation process without compromising on the rigour.

RPE has followed three different approaches. First is the traditional way, wherein evaluators had a common meeting to discuss and arrive at relative evaluation and ranking of members of the peer group employees. In the second, the number of evaluators and employees in a peer group were split in to 2 subgroups. The evaluators provided independent ratings and rankings. Simple mathematical tool then derived the combined ranking. In the third approach, each evaluator evaluated each employee in the peer group and provided the relative ranking for each employee. Again, mathematical tools provided the final ranking considering inputs from all evaluators. All the three evaluation approaches were analysed through an inter-rater agreement method.

All the three approaches for evaluation provided similar results giving confidence that less time-consuming methods could be adopted by evaluators without compromising on the rigour of the evaluation. The outcome of the exercise proved effective as the complaints reaching the ombudsmen reduced as compared to the earlier years. Considerable evaluation time was also saved. The study described in this paper is carried out in a non-unionized, Indian private sector services firm. Its effectiveness in other set ups is yet to be tested.

The research is carried out in the Indian Engineering services firm operating in the Knowledge based sector. Though study results are encouraging, the adaptability of methodology across different sectors and geographies is yet to be tested. More broad based studies are needed to evaluate suitability across firms and regions.

Relative evaluation exercise is challenging for evaluators. Although openness in evaluation is desired, it also makes evaluators uncomfortable in appearing to be taking sides or being opposing a candidate's ranking. The proposed approach brings in anonymity to each evaluator without scarifying individual evaluation.

The proposed methodology can be deployed across different services industries as the proposed methodology is business domain agnostic. It can be easily ported and tailored to align with an individual organization's evaluation philosophy. The suitability and effectiveness of the method can be studied under various types of firms like manufacturing, private, public, NGO, labour oriented, etc. As the proposed method reduces efforts, the stake holders can focus on understanding the relation between employee performance measurement, employee engagement, and long-term outcomes related to employee performance evaluation.

The proposed employee evaluation method leverages inter-rater reliability and agreement tool as a consensus approach to the relative performance ranking exercise. Such an approach to relative performance ranking is original as no prior studies with such an approach are found in the existing Literature.

Relative performance evaluation (RPE) is a widely studied topic in the theoretical and analytical accounting and economics literatures. The empirical literature also addresses this topic, with its main focus on executive compensation. This paper aims to extend the findings of the literature by assessing the extent to which RPE is used at lower organisational levels.

This study uses a purpose-developed survey to gather data from 325 business unit managers.

This study finds that RPE is used to a great extent in the performance evaluation of business unit managers. Additionally, the findings suggest that RPE use increases the informativeness of the performance evaluation through noise reduction. Noise in the performance evaluation is described in literature as the primary antecedent of RPE, but prior research provides only weak empirical support for this claim.

This study hypothesises a causal relation between RPE and noise in performance evaluation. However, the use of cross-sectional survey data only allows testing associations, not causations.

The originality and value of the paper lie in the focus on the business unit level and the use of survey data, which are almost completely absent in this area of research that almost exclusively uses archival data at the executive level.

The current study aims to investigate the relationship between relative performance and change manager in Iran.

For this study, the reasons for CEO change and the contributing factors to performance were defined based on the industry type. A systematic elimination approach is applied to select the study sample among listed companies on the Tehran Stock Exchange during 2012–2016. Finally, a 390 firm-year population was tested using multiple regression.

The results of hypothesis testing indicate that the possibility of managerial change is less likely after a positive return of the market performance. Moreover, hypothesis testing results reveal that peer firms and specific-firm performance do not contribute to managerial change. The findings also demonstrate that systematic risk has a negative impact on managerial change, whereas unsystematic risks do not significantly play a part in managerial change.

As the present study is the pioneer study on the impact of managerial change factors on Iranian firms' relative performance, the findings of this study can contribute to the realm of this study and the related literature.

The purpose of this paper is to explore the effects of varying motivation induced by financial incentives and common uncertainty caused by time pressure on audit judgment performance.

The experimental method is used to examine how financial incentives and time pressure affect audit performance, based on predictions by both economic and behavioral theories. The relative performance contract and the profit sharing contract are two incentive schemes considered. To achieve the incentive effect on subjects when conducting the experiment, all subjects were compensated with real cash rewards, according to their incentive contracts as randomly assigned.

As predicted, major results show that both incentive contract and time pressure affect audit judgment performance. The audit performance is generally better under the relative performance contract than under the profit sharing contract. Additionally, it is demonstrated that an increase in the level of time pressure significantly improves recall, recognition, and total efficiency under both types of incentive contracts, but impairs recall and total performance, particularly under the relative performance contract. Moreover, the reduction of recall and total performance under the relative performance contract is significantly greater than under the profit sharing contract. Nevertheless, in this case, the relative performance contract still outperforms the profit sharing contract.

The findings suggest the relative superiority of the relative performance contract in comparison with the profit sharing contract in improving auditors' judgment performance for structured tasks.

The relative performance contract would motivate junior auditors to exert more effort to increase their performance in the work environment of increased time pressure. The audit firms may incorporate relative performance evaluations into incentive schemes, to improve junior auditors' performance for structured tasks.

The paper is of value to audit firms in the design of performance‐contingent incentive contracts.

This paper aims to address performance measurement in the health-care sector, which gains increasing importance for most countries because growing health expenditures and increased quality and competition in the health sector require hospitals to use their resources efficiently. Health policy-makers and health-care managers stress the need for developing a robust performance evaluation methodology for health-care organizations.

This paper presents an imprecise data envelopment analysis (DEA) framework for evaluating the health-care performance of 26 districts in Istanbul, a metropolis with nearly 15 million inhabitants. The proposed methodology takes into account both quantitative and qualitative data represented as linguistic variables for performance evaluation. Moreover, this study reckons that weight flexibility in DEA assessments can lead to unrealistic weighting schemes for some inputs and outputs, which are likely to result in overstated efficiency scores for a number of decision-making units (in here, districts). To overcome this problem, a weight restricted imprecise DEA model that constrains weight flexibility in DEA is proposed.

The proposed imprecise DEA approach sets forth a more realistic decision methodology for evaluating the relative health-care performance and also enables to determine the best district in terms of health-care performance in Istanbul.

This paper includes the quality dimension, which has been overlooked in previous studies, into the health-care performance evaluation of districts. Moreover, it circumvents unrealistic weight flexibility which may distort the relative evaluation of health-care performance.

The purpose of this paper is to test the direct effect of B2B sellers' skills on relative and absolute sales performance.

Based on a questionnaire survey and deductive approach. A total of 236 useable questionnaires out of 315 are returned, generating a response rate of 74.9%.

Only one out of twelve hypothesized relationships in the research model of the direct effect of B2B sellers' skills on relative and absolute sales performance turned out to be significant.

Indicate that the researchers’ current understanding of the effect of sales performance indicators on sales performance, based on B2B sellers' skills, is narrow and simplistic.

Results indicate that there are skills other than the tested ones (i.e. interpersonal, adaptiveness and selling-related knowledge), that can have direct effects on B2B sellers' relative and absolute sales performance.

Sheds light on the ambiguous direct effect of B2B sellers' skills on sales performance and the almost non-existent direct effect on B2B sellers' relative and absolute sales performance.

This paper investigates CEO turnover and the usefulness of relative performance evaluation (RPE) as a management incentive in an emerging economy lacking market-based competition.

In a sample of China’s listed state-owned enterprises (SOEs) from the period 2001 to 2005, we manually collect the data where a CEO has gone after being removed by reading the annual reports of the firms and searching the major news and business publications, and run OLS regressions to examine how various incentives provided by different CEO turnovers such as promotion, demotion, and rotation affect the firm performance.

We find that 41% of departing CEOs in SOEs is being promoted. The promotion is positively associated with preceding firm performance relative to peers in the same region and this association is more significant than that between the promotion and firm’s specific performance. Furthermore, the promotion outperforms other incentive schemes such as CEO demotions by 5–8% in terms of subsequent Tobin’s q in three years. These consequences persist in undeveloped regions where there are fewer firms listed on the stock market, a lower stock market capitalization, or a higher regional Herfindahl–Hirschman Index ( HHI ).

The findings imply that promotion based on RPE provides an important incentive by creating competitions.

This paper presents a new perspective for the use of relative performance evaluation. It argues that firms may want to evaluate their CEOs relative to their competitors for strategic reasons. It considers a competitive industry and with the help of a multiple agency model arrives at a set of hypotheses regarding the weights on firm performance and industry performance. These hypotheses do not have an analogue in a traditional single agency model framework. The empirical hypotheses relating the compensation contract parameters to the cost and market structures of the industry are tested with cash compensation data from 272 firms over a period of 18 years. Some of the empirical hypotheses find support from the data. Finally the paper also investigates whether the data supports alternate hypotheses arrived at by considering competing explanation for the use of RPE based on Holmstrom’s informativeness criterion.

The paper aims to revisit the topic of relative performance evaluation (RPE) of top management using a large panel of community banks.

The empirical tests for RPE utilized a two‐stage approach in a unique dataset of community banks executive turnover over a ten‐year period. This allowed the authors to better estimate the benchmark performance relative to which bank executives should be evaluated under RPE. Moreover, bank regulatory evaluations allowed the authors to control for the impact of poor governance.

The paper shows that penalizing executives for poor performance arising from economic downturns is not necessarily inconsistent with the theory. The empirical results indicate that weak downturn‐linked performance is strongly related to increased executive turnover. Furthermore, this relationship is more pronounced in better‐governed banks, which are more likely to engage in value‐enhancing disciplinary actions.

The analysis suggests that executive dismissals during adverse economic conditions are not necessarily a result of bad luck; rather, the analysis implies that bad times are informative about management quality.

The main practical implication is that both relative and absolute performance should be incorporated in the incentive structure of bank executives.

The paper shows that the assumptions used in prior RPE studies may not be applicable to top executives which could explain the inconsistency between the theory and the empirical evidence. Further, the finding that better governed firms are more likely to penalize management for bad exogenously driven performance is unique and strengthens the case that disciplinary actions amid adverse economic times may not be due to bad luck.

The purpose of this paper is to investigate conditions under which voters’ comparison of relative performance between adjacent jurisdictions can help reduce rent‐seeking by politicians.

A theoretical model was developed to examine the effectiveness of yardstick competition in restraining political corruption, first under a static setting, and then under a dynamic setting, using optimal control theory and differential games. It is assumed that voters compare the performance of their incumbent government with that of a neighboring jurisdiction. The incumbent can provide a public good and extract rent, which are financed by imposing a distortionary tax on the population. Politicians derive utility from rent as well as from popularity. The stock of reputation builds up or decays over time. Reputation is decreasing in rent appropriation.

Without assigning an ex ante type on the politician, the paper demonstrates the possibility that yardstick competition itself fails to restrict rent seeking. When the model is extended to a dynamic setting, it is shown that under unitary performance evaluation, dynamic incentives restrain the politician only if the shadow value of reputation (that measures current and future marginal benefits of increased reputation) is sufficiently high throughout the term. it is shown that, for such a high shadow value to exist, benefits of both instantaneous and end‐of‐period reputations have to be high enough. On the other hand, under relative performance evaluation, dynamic incentives impose more restrictions on rent appropriation in comparison to the static case.

This paper offers the first formal analysis, using differential games, of the role of the interaction between electoral considerations and neighborhood demonstration effects (with respect to relative rent extraction) in determining a politician's optimal rent‐seeking behaviour.