Management Accounting Section Midyear Meeting

Narrative Feedback in Subjective Performance Evaluations: Do Ratings Change the Narrative?

• In Event: Subjective Performance Evaluation

Abstract

Several high-profile companies have removed subjective performance ratings from their performance management processes leaving only narrative evaluations. Using an experiment, I test theory on motivated reasoning to learn how simultaneously providing a performance rating affects the narrative evaluation supervisors provide to employees in the presence of directional goals. I predict and find that the favorability of narrative evaluations is influenced by directional goals, but the effect of those directional goals on narrative evaluation favorability is reduced when supervisors also provide a numerical rating of the employee’s performance. Numerical ratings appear to be more resistant to directional goals which then constrain the effect of directional goals on narrative evaluation favorability. I extend the performance evaluation literature by investigating the relationship between two forms of subjective evaluations: ratings and narratives. Also, I provide cautionary evidence to firms that have removed or are considering removing subjective performance ratings from their performance management systems.

Author

• Kyle Stubbs, Utah Valley University