IDEAS home Printed from https://ideas.repec.org/a/bla/stratm/v43y2022i12p2577-2601.html
   My bibliography  Save this article

How do managers evaluate individual contributions to team production? A theory and empirical test

Author

Listed:
  • Jose Uribe
  • Seth Carnahan
  • John Meluso
  • Jesse Austin‐Breneman

Abstract

Research Summary Organizations rely on subjective evaluations to reward employees for team‐based performance. However, it is unclear how supervisors determine individuals' contributions to collective output. We theorize that supervisors rely on the covariance between employees' presence and their teams' productivity. If teams are more productive when an employee is present, the supervisor may infer a greater contribution from the employee. Using data from a manufacturing firm, we find that covariation between an employee's presence and her team's output has a positive effect on her evaluation. This relationship is stronger when supervisors have more opportunities to observe an employee across various teams and when the employee has more authority to direct team production, supporting counterfactual information as an important component of evaluations for individuals engaged in team production. Managerial Summary It is notoriously difficult to evaluate the individual performance of employees when the only available metric is team‐based output. We suggest that supervisors help solve this problem by observing how team output correlates with changes in team membership. We construct a measure of the covariance between an employee's presence in a team and the team's productivity, and find a positive relationship between this measure and the employee's annual subjective performance evaluation. Our results indicate that subjective evaluations reflect individual contributions to team production fairly well for employees who (a) have sufficient authority to direct team production and (b) are frequently rotated beyond a single team. We discuss what kinds of organizations might benefit from this measure as an input to their performance evaluation processes.

Suggested Citation

  • Jose Uribe & Seth Carnahan & John Meluso & Jesse Austin‐Breneman, 2022. "How do managers evaluate individual contributions to team production? A theory and empirical test," Strategic Management Journal, Wiley Blackwell, vol. 43(12), pages 2577-2601, December.
  • Handle: RePEc:bla:stratm:v:43:y:2022:i:12:p:2577-2601
    DOI: 10.1002/smj.3433
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/smj.3433
    Download Restriction: no

    File URL: https://libkey.io/10.1002/smj.3433?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
    3. Anders Frederiksen & Lisa B. Kahn & Fabian Lange, 2020. "Supervisors and Performance Management Systems," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2123-2187.
    4. Boris Groysberg & Linda-Eling Lee & Ashish Nanda, 2008. "Can They Take It With Them? The Portability of Star Knowledge Workers' Performance," Management Science, INFORMS, vol. 54(7), pages 1213-1230, July.
    5. Y. Sekou Bermiss & Johann P. Murmann, 2015. "Who matters more? The impact of functional background and top executive mobility on firm survival," Strategic Management Journal, Wiley Blackwell, vol. 36(11), pages 1697-1716, November.
    6. McAfee, R Preston & McMillan, John, 1991. "Optimal Contracts for Teams," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 561-577, August.
    7. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2013. "Team Incentives: Evidence From A Firm Level Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1079-1114, October.
    8. Marianne Bertrand & Antoinette Schoar, 2003. "Managing with Style: The Effect of Managers on Firm Policies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1169-1208.
    9. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages 112-142, February.
    10. Sendil K. Ethiraj & Pranav Garg, 2012. "The Division of Gains from Complementarities in Human-Capital-Intensive Activity," Organization Science, INFORMS, vol. 23(3), pages 725-742, June.
    11. Robert Gibbons, 1998. "Incentives in Organizations," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 115-132, Fall.
    12. George Baker & Robert Gibbons & Kevin J. Murphy, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 1125-1156.
    13. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2010. "Social Incentives in the Workplace," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(2), pages 417-458.
    14. Pierre Azoulay & Joshua S. Graff Zivin & Jialan Wang, 2010. "Superstar Extinction," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 549-589.
    15. Victoria Sevcenko & Sendil Ethiraj, 2018. "How Do Firms Appropriate Value from Employees with Transferable Skills? A Study of the Appropriation Puzzle in Actively Managed Mutual Funds," Organization Science, INFORMS, vol. 29(5), pages 775-795, October.
    16. H. Colleen Stuart, 2017. "Structural Disruption, Relational Experimentation, and Performance in Professional Hockey Teams: A Network Perspective on Member Change," Organization Science, INFORMS, vol. 28(2), pages 283-300, April.
    17. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    18. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
    19. Emilio J. Castilla & Aruna Ranganathan, 2020. "The Production of Merit: How Managers Understand and Apply Merit in the Workplace," Organization Science, INFORMS, vol. 31(4), pages 909-935, July.
    20. Todd R. Zenger & William S. Hesterly, 1997. "The Disaggregation of Corporations: Selective Intervention, High-Powered Incentives, and Molecular Units," Organization Science, INFORMS, vol. 8(3), pages 209-222, June.
    21. Alexander Oettl, 2012. "Reconceptualizing Stars: Scientist Helpfulness and Peer Performance," Management Science, INFORMS, vol. 58(6), pages 1122-1140, June.
    22. Robert S. Huckman & Gary P. Pisano, 2006. "The Firm Specificity of Individual Performance: Evidence from Cardiac Surgery," Management Science, INFORMS, vol. 52(4), pages 473-488, April.
    23. Heather Sarsons, 2017. "Recognition for Group Work: Gender Differences in Academia," American Economic Review, American Economic Association, vol. 107(5), pages 141-145, May.
    24. Claudine Gartenberg & Julie Wulf, 2017. "Pay Harmony? Social Comparison and Performance Compensation in Multibusiness Firms," Organization Science, INFORMS, vol. 28(1), pages 39-55, February.
    25. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2013. "Team incentives: evidence from a firm level," LSE Research Online Documents on Economics 53141, London School of Economics and Political Science, LSE Library.
    26. John S. Chen & Pranav Garg, 2018. "Dancing with the stars: Benefits of a star employee’s temporary absence for organizational performance," Strategic Management Journal, Wiley Blackwell, vol. 39(5), pages 1239-1267, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fabienne Jedelhauser & Raphael Flepp & Egon Franck, 2023. "Overshadowed by Popularity: The Value of Second-Tier Stars in European Football," Journal of Sports Economics, , vol. 24(8), pages 1026-1054, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel W. Elfenbein & Adina D. Sterling, 2018. "(When) Is Hiring Strategic? Human Capital Acquisition in the Age of Algorithms," Strategy Science, INFORMS, vol. 3(4), pages 668-682, December.
    2. Frederiksen, Anders & Hansen, Daniel Baltzer Schjødt & Flaherty Manchester, Colleen, 2022. "Does Group-Based Incentive Pay Lead To Higher Productivity? Evidence from a Complex and Interdependent Industrial Production Process," IZA Discussion Papers 14986, Institute of Labor Economics (IZA).
    3. Cai, Xiqian & Jiang, Wei & Song, Hong & Xie, Huihua, 2022. "Pay for performance schemes and manufacturing worker productivity: Evidence from a kinked design in China," Journal of Development Economics, Elsevier, vol. 156(C).
    4. David J. Cooper & Krista Saral & Marie Claire Villeval, 2021. "Why Join a Team?," Management Science, INFORMS, vol. 67(11), pages 6980-6997, November.
    5. Robert Butler & Liam J. A. Lenten & Patrick Massey, 2020. "Bonus incentives and team effort levels: Evidence from the “Field”," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(5), pages 539-550, November.
    6. De Paola, Maria & Gioia, Francesca & Scoppa, Vincenzo, 2019. "Free-riding and knowledge spillovers in teams: The role of social ties," European Economic Review, Elsevier, vol. 112(C), pages 74-90.
    7. Greer K. Gosnell & John A. List & Robert Metcalfe, 2016. "A New Approach to an Age-Old Problem: Solving Externalities by Incenting Workers Directly," NBER Working Papers 22316, National Bureau of Economic Research, Inc.
    8. Flores-Fillol, Ricardo & Iranzo, Susana & Mane, Ferran, 2017. "Teamwork and delegation of decisions within the firm," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 1-29.
    9. Tat Y. Chan & Jia Li & Lamar Pierce, 2014. "Compensation and Peer Effects in Competing Sales Teams," Management Science, INFORMS, vol. 60(8), pages 1965-1984, August.
    10. Gjedrem, William Gilje & Kvaløy, Ola, 2020. "Relative performance feedback to teams," Labour Economics, Elsevier, vol. 66(C).
    11. Bartke, Simon & Gelhaar, Felix, 2018. "When does team remuneration work? An experimental study on interactions between workplace contexts," Kiel Working Papers 2105, Kiel Institute for the World Economy (IfW Kiel).
    12. Philipp Wegelin & Johannes Orlowski & Helmut M. Dietl, 2022. "The importance of high performing team members in complex team work: Results from quasi‐experiments in professional team sports," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1296-1310, July.
    13. Barlow, Matthew A. & Hesterly, William S. & Cameron Verhaal, J., 2023. "Catching a falling star: Mobility of declining star performers, peer effects, and organizational performance in the National Football League," Journal of Business Research, Elsevier, vol. 165(C).
    14. Kelly, E.; & Propper, C.; & Zaranko, B.;, 2022. "Team composition and productivity: evidence from nursing teams in the English National Health Service," Health, Econometrics and Data Group (HEDG) Working Papers 22/19, HEDG, c/o Department of Economics, University of York.
    15. Afridi, Farzana & Dhillon, Amrita & Sharma, Swati, 2015. "Social Networks and Labour Productivity: A Survey of Recent Theory and Evidence," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 50(1), pages 25-42.
    16. Guido Friebel & Matthias Heinz & Miriam Krueger & Nikolay Zubanov, 2017. "Team Incentives and Performance: Evidence from a Retail Chain," American Economic Review, American Economic Association, vol. 107(8), pages 2168-2203, August.
    17. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    18. Jason J Sandvik & Richard E Saouma & Nathan T Seegert & Christopher T Stanton, 2020. "Workplace Knowledge Flows," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(3), pages 1635-1680.
    19. Michael Waldman, 2012. "Theory and Evidence in Internal LaborMarkets [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    20. Bäker, Agnes & Mertins, Vanessa, 2013. "Risk-sorting and preference for team piece rates," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 285-300.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:stratm:v:43:y:2022:i:12:p:2577-2601. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/0143-2095 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.