Multitasking Incentives and the Informative Value of Subjective Performance Evaluations

Abstract

Using personnel records from a car sales company, this study shows that subjective performance evaluations of sales representatives are less sensitive to objectively measured sales in the presence of hard-to-measure, non-sales tasks. Findings confirm that supervisors use the evaluations to incentivize employees to pursue these tasks, such as mentoring junior representatives and building long-term customer relationships. The authors show that subjective evaluations predict future sales, suggesting that the evaluations have informative content related to actual worker performance. The authors find that the response of workers who receive lower-than-expected evaluations differs by supervisor experience: Those who are evaluated by inexperienced supervisors quit more often, whereas those who are evaluated by experienced supervisors respond with lower sales in the next period, even though distribution of evaluations does not vary by supervisor experience. Results are consistent with the interpretation that experienced supervisors are better able to communicate with workers to induce desired behavior.