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What Do Performance Appraisals Do?

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  • Peter Cappelli
  • Martin Conyon

Abstract

This paper investigates employee performance appraisals using data from a single US firm between 2001 and 2007. We find that performance appraisals are both informative and drive important components of the employment contract. We find that employee appraisal scores vary considerably both between and within individuals over time. In addition, we show that employee performance appraisal scores are related to a range of important employment outcomes, including merit pay and bonuses, promotions, demotions and dismissals, as well as employee quits.

Suggested Citation

  • Peter Cappelli & Martin Conyon, 2016. "What Do Performance Appraisals Do?," NBER Working Papers 22400, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22400
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    Cited by:

    1. Alan Benson & Ben A. Rissing, 2020. "Strength from Within: Internal Mobility and the Retention of High Performers," Organization Science, INFORMS, vol. 31(6), pages 1475-1496, November.
    2. Grund, Christian & Sliwka, Dirk & Titz, Krystina, 2023. "Works Councils as Gatekeepers: Codetermination, Monitoring Practices, and Job Satisfaction," IZA Discussion Papers 15956, Institute of Labor Economics (IZA).
    3. Grund, Christian & Sliwka, Dirk & Titz, Krystina, 2019. "Works Councils and Performance Appraisals," IZA Discussion Papers 12670, Institute of Labor Economics (IZA).
    4. Naveed Ahmad Khan & Andrija Mihoci & Silke Michalk & Kirill Sarachuk & Hafiz Ali Javed, 2022. "Employee Performance Measures Appraised by Training and Labor Market: Evidence from the Banking Sector of Germany," Administrative Sciences, MDPI, vol. 12(4), pages 1-13, October.
    5. Ndalahwa Musa Masanja, PhD & Ndalahwa Adelphina Rweyemamu, 2020. "The Factors Affecting the Implementation of 360 Degree Feedback on Organizational Performance for Selected Companies Located in Arusha," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(7), pages 113-121, July.
    6. Manthei, Kathrin & Sliwka, Dirk & Vogelsang, Timo, 2019. "Talking about Performance or Paying for it? Evidence from a Field Experiment," IZA Discussion Papers 12446, Institute of Labor Economics (IZA).
    7. Kathrin Manthei & Dirk Sliwka & Timo Vogelsang, 2023. "Talking About Performance or Paying for It? A Field Experiment on Performance Reviews and Incentives," Management Science, INFORMS, vol. 69(4), pages 2198-2216, April.
    8. Heilman, Madeline E. & Manzi, Francesca & Caleo, Suzette, 2019. "Updating impressions: The differential effects of new performance information on evaluations of women and men," Organizational Behavior and Human Decision Processes, Elsevier, vol. 152(C), pages 105-121.
    9. Mariia Petryk & Michael Rivera & Siddharth Bhattacharya & Liangfei Qiu & Subodha Kumar, 2022. "How Network Embeddedness Affects Real-Time Performance Feedback: An Empirical Investigation," Information Systems Research, INFORMS, vol. 33(4), pages 1467-1489, December.
    10. Houldsworth, Elizabeth & Marra, Marianna & Brewster, Chris & Brookes, Michael & Wood, Geoffrey, 2021. "Performance appraisal and MNEs: The impact of different capitalist archetypes," International Business Review, Elsevier, vol. 30(5).
    11. Michael Rivera & Liangfei Qiu & Subodha Kumar & Tony Petrucci, 2021. "Are Traditional Performance Reviews Outdated? An Empirical Analysis on Continuous, Real-Time Feedback in the Workplace," Information Systems Research, INFORMS, vol. 32(2), pages 517-540, June.
    12. Rocio Bonet & Tor Eriksson & Jaime Ortega, 2019. "Up for Review: Unravelling the Link between Formal Evaluations and Performance‐Based Rewards," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(1), pages 108-137, January.
    13. Abraham, Lisa, 2023. "The gender gap in performance reviews," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 459-492.

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    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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