Master Thesis
Subjective Performance Evaluation Systems
and Trust in Subordinate-Supervisor
Relationships
Benedetta Paffarini
S3490920
MSc Business Administration
Organizational and Management Control
University of Groningen
Supervisor: Nicolas Mangin
Co-Assessor: Pr. Van Veen-Dirks
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Introduction
In the last decades, the development of the Stakeholder Theory (Freeman, 1982) has brought companies to meet the expectations and needs of multiple stakeholders within markets (Sundin et al., 2010). In order to do so, new management control tools, such as the Balance Scorecard (Kaplan and Norton, 1992), have been introduced. This one enables to find a balance among the different stakeholders’ objectives (Sundin et al., 2010), through the complement of financial measures with non-financial ones in measuring performance (Kaplan and Norton, 2007).
Because of taking all these instances into account, employees’ job have become multidimensional and more metrics have been implemented to evaluate those (Sundin et al., 2010). In this context, traditional objective evaluation systems have proved to be incomplete in describing employees’ performances, leaving unevaluated relevant aspects of them (Ittner, Larcker and Meyer, 2003). Thus, subjectivity in performance evaluation has been introduced in order to render more comprehensive assessments (Yustina et al., 2017; Gibbs et al., 2004).
Literature has seen desirable the transition towards subjectivity. Subjectivity enhance the completeness of performance assessment (Bol, 2008), allowing to consider all those aspects of a job that cannot be measured objectively (Kunz, 2015), thus, mitigating distortions in efforts (Woods, 2012) and increasing perceived accuracy among employees (Bol, 2008). Then, subjectivity helps in reducing bias in judgement due to uncontrollable factors, that could affect objective measures unfavourably (Bol and Smith, 2011), and in mitigating risk and dealing with interdependencies (Gibbs et al., 2004).
However, subjectivity has also been exposed to criticisms and scepticism by many authors, who have highlighted the drawbacks reconnected to it, such as the possibility for noisy evaluations due to lenient behaviours of the evaluators (Prendergast and Topel, 1993) and their cognitive limitations (Bol and Smith, 2011) and personal characteristics influencing judgements (Baker et al., 1994; Prendergast, 1999).
The body of research in this field is still limited and many more variables should be considered. Gibbs et al. (2004) suggest the implementation of different research approaches to develop knowledge around subjectivity. These would allow studying the behavioural aspects that subjectivity influences, such as trust and the conflicts in relationship between subordinates and supervisor (Gibbs et al., 2004)
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increasing the acceptance and the satisfaction with the evaluation received among employees (Gibbs et al., 2004; Illgen et al., 1994).
A recent body of literature, grounded in management accounting and behavioural theories, has tried to explain the relation that exists between trust and subjective performance evaluation (Hartman and Slapnicar, 2009; Lau and Scully, 2015).Results show how these two reciprocally influence each other’s in a bidirectional and reflective way. While, on one hand, trust between employees and the supervisor is crucial for the successful implementation of performance evaluation; on the other hand, subjectivity affects the level of trust in subordinate-superior relationships, both in positive (Lau and Scully, 2015; Mayer, 1999) and negative ways (Hopwood, 1972; Lau and Buckland, 2001). Thus, the linkages existent between these two have not been still fully understood, especially considering that empirical evidence has shown contrasting results (Hartman and Slapnicar, 2009). Lau and Buckland (2001) and Lau and Shohilin (2005) report opposite findings when studying the effects on subordinates’ trust of the introduction of financial and non-financial performance criteria from the superior.
Comprehending in a holistic way the relationship between subjectivity and trust and how they affects each other’s is essential to understand how they influence the employee’s outcomes, in terms of interpersonal trust, fairness perceptions, commitment and satisfaction performance (Lau and Scully, 2015).
Thus, the aim of this paper is trying to fill the gap in literature concerning the relationship existing between subjective performance evaluation and trust, specifically in the case of the subordinate-supervisor relationship. In order to disentangle and clarify the connections among the two, we analyse how the implementation of subjectivity affects trust among subordinates towards the supervisor and how, in reverse, trust moderates the potential drawbacks of subjectivity. Based on these considerations, the research question of the paper is the following one:
“How do trust in the supervisor and the effects of subjective performance evaluation systems reciprocally affect each other’s in the case of subordinate-supervisor relationships?”
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In this paper, we address the research question by conducting an explanatory field study within Italian firms of different size and sector. I conducted interviews with both supervisors and subordinates in order to have a real-time feedback from those who experience in first person the evaluation process and the effects of this on trust relationship with the subordinate/supervisor.
Firstly, findings of this paper show that in some organizational contexts the introduction of subjectivity in evaluations is more appropriate than in other contexts, where objective evaluation systems are preferable. Secondly, results shows that in small companies the weakness of subjective performance evaluation are much more salient that in big ones due to different subordinate-supervisor relationships and the different level of formalization and documentation of the evaluation procedure. Finally, the paper reveals how such differences may affect differently subordinates’ perceived fairness of the evaluation procedure and, as a consequence, their trust-levels towards the supervisor.
The remainder of this paper is structured as follows. Section ‘‘Literature Review” provides an overview of the extant literature on performance evaluation and the relationships with trust and identifies some of the conflicts in extant studies. Section ‘‘Methodology” presents the design of the field study, with a detailed description of the procedures of data collection and analysis. Section ‘‘Results” presents findings from the analysis of the material gathered during the interviews. Section ‘‘Discussion and Conclusions” concludes the paper with an overview of findings, the study’s limitations and some directions for future research.
Literature Review
Objective and Subjective Performance Evaluation
In management accounting literature, an optimal performance measure is defined as one accurate, informative and timely, that is capable of evaluating current actions in terms of the effects they have on future profitability, without exposing employees to unnecessary risk (Bellavance et al., 2013; Baker et al., 1994; Holmstrom, 1979).
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Goudono, 2017). The adoption of similar internal control mechanisms is deemed appropriate for companies where the technology and the input-output relationship is perfectly intelligible (Ouchi, 1979).
However, objective performance evaluations, which have been implemented in the majority of cases from companies (Ittner et al., 1997), often lack in accuracy, completeness and punctuality (Bol., 2008; Holmstrom, 1979). In the modern economic environment, where companies’ agenda have been revolutionized in order to meet all the different interests of various stakeholders (Sundin et al., 2010), objective evaluations, hinging on financial oriented metrics, are incapable of giving a performance assessment that is comprehensive enough due to their incapacity in capturing all the multidimensional performance imperatives (Atkinson, 2006).
Moreover, objective evaluations have been criticized for giving distorted incentives to employees, who may use them to maximize their own returns in the short run, sacrificing the overall interests of the company (Ittner et al., 2003; Feltham and Xie, 1994) and producing a misalignment of interests among organizational actors (Prendergast and Topel, 1993). It is the need for companies to find a balance and align different stakeholders’ interests that has enhanced the development of the Balance Scorecard (Kaplan and Norton, 1996).
Then, objective evaluations are prone to subjugate employees to undue risk due to uncontrollable events, that can negatively influence performance evaluation, and, for which, adjustments ex-post are not allowed (Gibbs et al., 2004; Feltham and Xie, 1994), producing, in this way, noisy evaluations (Kunz, 2015; Bol, 2008).
Clearly, all these deficiencies are perceived to be more intense in the modern fast-changing markets (Frederiksen et al., 2017; Budde, 2007), where employees are assigned to multidimensional tasks within firms (Sundin et al., 2010, Holmstrom and Milgrom, 1991). Consequently, many companies have adopted non-financial measures (Ittner et al., 1997; Feltham and Xie, 1994), which can be combined with financial metrics in order to give an appraisal of the performance that is capable of taking into account all the relevant facets of it. The integration of both financial and non-financial measures allows to evaluate the employee from a broader perspective that does not only consider the numerical outcomes, but also at the quality of the job done and other non-quantifiable aspects of it (Krem and Tyson, 2009; Bellevance et al., 2013).
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different weights to the various performance measures and, finally, through the use ex-post discretional revision of evaluations, based on criteria that were not included or specified ex-ante (Bellavance et al.; 2013).
Therefore, objective measures have been accompanied in many firms by subjective performance evaluations (Woods, 2012; Bol, 2008). The performance assessment, in this case, is a process during which the supervisor evaluates subordinates’ performances, on the basis of his/her discretional judgement about non-quantifiable aspects, that objective measures cannot appreciate (Bellavance et al., 2013; Frederiksen et al., 2017). In this way, the incompleteness of formal contracts in evaluating performance (Bol and Smith, 2011; Larcker et al., 2003) has been compensated and more dimensions are now considered (Holmstrom and Milgrom, 1991; Feltham and Xie, 1994).
However, although the interest in literature about the use of subjectivity in executive incentive contracts has increased importantly in the last decades, there is still no agreement about the best method to adopt for performance evaluations (Hartmann and Slapnicar, 2009).
Strengths and Weaknesses of Subjective Performance Evaluation
Strengths of Subjective Performance Evaluation
Research has highlighted many benefits associated with the introduction of subjectivity in performance evaluation. Firstly, subjectivity helps in mitigating incentive distortions (Bol, 2008). Formal contracts have been criticized for not considering many aspects of the job and for being backward looking, giving, in the end, employees distorted incentives to operate. Thus, introducing subjectivity allows for the evaluation of other aspects, which were not captured by metrics or cannot be set in advance(Breuer et al., 2013), and they force managers to operate following more elaborated stimulus and motivations (Baker, Gibbons and Murphy, 1994).
Secondly, subjectivity can help in reducing risk (Bol, 2008), caused by uncontrollable external events, and in dealing with interdependencies (Gibbs et al., 2004). In fact, by introducing subjectivity, the superior is able to produce discretionary adjustments on the evaluation based on particular events, which could have make more difficult for the employees meeting the assigned targets.
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Milgrom 1991; Baker et al. 1994; Ittner et al. 2003). In fact, rewarding systems, pre-determined ex-ante and fixed upon the achievement of economic targets, have been exploited by employees to maximize their own returns, without any interest for the company’s superior interests. Subjectivity can help in avoiding these risks and in detecting manipulation, being performance evaluated ex-post and on the basis of more than one parameter (Murphy and Oyer, 2003).
Finally, one last benefit reconnected to the introduction of subjectivity is the reduction of perceived unfairness among employees (Bol, 2008) being possible for the superior to discretionary adjust contracts. This prevents the risks of a negative attitude shown by the subordinates and the possibility that they could act against the company, because of a lack of procedural and distributive justice (De Cremer and Tyler, 2007).
Weaknesses of Subjective Performance Evaluation
Although the benefits related to subjectivity are relevant and partly evidence has been found for them, a stream in literature has also highlighted significant drawbacks connected to them.
First, distortions and bias have been found in subjective performance evaluations due to the social proximity between the superior and the subordinate. Vicinity may lead to the centrality bias, when supervisors do not discriminate among subordinates’ different performances adequately, and the leniency bias, which drives supervisors to give superior evaluations to the poor performers (Prendergast, 1999; Bol, 2011) or to the employees who are closer to them (Breuer et al., 2013). Then, subjectivity could be fraught with the risk of reneging, when the employee is not rewarded for what contracted in advance (Prendergast and Topel, 1993) or when the supervisor intentionally evaluate the performance badly not to increase wage costs (Prendergast, 1999).
Furthermore, the cognitive limitations of the supervisor can preclude the full benefits associated with the introduction of subjectivity (Bol and Smith, 2011) due to the fact that cognitive distortions or attempts to overcome deficiencies in measurements could lead to incorrect evaluations (Bellavance et al., 2013; Moers, 2005; Oatley, 1999). This affects negatively the subordinates’ assessment and, then, their morale in terms of job satisfaction and motivation. Knowing that the supervisor has the power to shape the evaluation and reward of the subordinate as his/her own necessity, without a third-party enforcing the contract, could make the subordinate think that the superior is acting opportunistically or that he/she will not be rewarded fairly (Bol, 2008).
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performance (Bol, 2008). This, as empirical research demonstrates, influences negatively the employees’ incentives to act, reduces their job satisfaction and makes them complaining about favouritism and uncertainty in rewards (Cohen-Charash and Spector, 2001; Colquitt et al., 2001).
From the preceding discussion, we can see how subjectivity (and the discretion in judgements it comprises) makes the subordinate vulnerable to the actions of the superior. Therefore, it is necessary for the subordinates to accept and be willing to be subdued to such vulnerability. In management literature, trust has been defined as “the intention to accept vulnerability based on positive expectations of the intentions or behaviour of another” (Rousseau et al., 1998). Thus, this conceptualization of trust describes properly the subordinate-supervisor relationship, in which employees make themselves vulnerable to the judgement of their supervisors, when carrying out their job, with the optimistic expectation that they will be evaluated fairly for their accomplishments (Mayer, 1999).
The Role of Trust
A consistent body of research and empirical evidence have shown how trust and subjective performance evaluation are related (Lau and Scully, 2005; Van der Stede et al., 2006). However, there is still much debate about these themes, being the relationship between the two elements ambiguous and difficult to disentangle (Hartmann and Slapnicar, 2009; Dirks and Ferrin, 2002). Trust and performance evaluation affect each other’s in a bidirectional way, meaning that one is capable of influencing the other. Then, the relationship among these two is enigmatic, being the effects of one on the other not necessarily totally positive or negative.
In order to clarify this relationship further, it is deemed interesting analysing how subordinate’s trust, who is the vulnerable part in the subordinate-supervisor relationship, can moderates the effects of the introduction of subjectivity in evaluations and how, in reverse, subjectivity can influence subordinate’s trust levels towards the supervisor.
How Trust Moderates the Effects of Subjective Performance Evaluation
Trust plays a key role in the performance evaluation process, being capable of influencing the relationship between the subordinate and the supervisor and, thus, the attitude of the parties towards this important phase of the organizational life (Reinke, 2003).
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2004). Then, trust positively influences the “acceptance of feedbacks” in superior-subordinate relations (Ilgen et al.,1979), especially in those cases where performance is hardly measurable with objective parameters (Erdogan et al., 2001), fostering the conviction that this has been assessed accurately (Fulk et al., 1985). In addition, trust can positively moderate the effects of anxiety and job-related tension for the subordinate (Ross, 1994).
However, the influence of trust on performance evaluation is not necessarily positive. In cases where the level of trust among parties is too high, it could be exploited by the supervisor to manipulate and divert results for different reasons. For example, under-reporting about the subordinate’s performance in order to save on wages, when subjective performance evaluation is linked to salary adjustments (Prendergast, 1999). Then, the moderating effect of trust on job-related tension is reduced when the performance is appraised subjectively by the supervisor rather than based on accounting information. In this case, judgement could be potentially biased and idiosyncratic, depending the feedback on the superior’s personal judgement and the qualitative criteria used (Ross, 1994). Such biases could have dysfunctional consequences on vary dimensions: employees who feel discriminated may quit, which results in higher turnover costs for the company; then, sentiments of favouritism among employees may negatively affect their job motivation and morale, lowering efforts and outputs overall (Prendergast and Topel, 1993).
How Subjective Performance Evaluation Affects Trust
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evaluations, is due to the perception that the supervisors are acting benevolently and willingly to assess their performance more fairly. Conversely, objective performance evaluations, that are too severe and do not allow for further corrections, could block the development of subordinates’ trust, because they could interpret this tightness of standards as the willingness to excerpt a more resolute control and, thus, as the signal of a non-trustworthy relationship (Mayer et al., 1995).
Some studies, on the contrary, have demonstrated how subjective evaluation systems can deteriorate subordinate’s trust towards the supervisor. Hopwood (1972) in his study reports how employees showed to have a higher level of trust towards their supervisors when they had made use of metrics strictly joint to accounting numbers for the evaluation. Following this path, Lau and Buckland (2001) demonstrate how budget-related metrics are able to signal to subordinates the willingness of the supervisor to provide an appraisal that is the objective and honest. The same evidence was not found with the use of non-financial metrics, which were perceived by the subordinates to be too inaccurate and partial, thus lowering their level of trust. Similarly, Hartman and Slapnicar (2009) reported how the use of formal evaluation systems, in comparison to informal ones, can yield a higher level on trust among subordinates. According to the authors, the use of objective metrics, allow for an evaluation that is more accurate, consistent and integral than informal and subjective parameters do.
Therefore, as it is possible to conclude from the previous analysis, results of previous studies on the relationship between trust and subjective performance evaluation are ambiguous and inconclusive. On one side, adequate trust levels of the subordinates towards the supervisor moderate the negative effects of subjective evaluations; on the other side, however, there is the risk that this trust could be exploited by the superiors at their own advantage. Conversely, the introduction of subjective performance evaluation was found capable of influencing both negatively and positively the level of trust among subordinates towards supervisors. Such ambiguities lead the study to the following research question:
“How do trust in the supervisor and the effects of subjective performance evaluation systems reciprocally affect each other’s in the case of subordinate-supervisor relationships?”
Methodology
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among subjective performance evaluation and trust and how they reciprocally affect each other’s, specifically in the case of the subordinate-supervisor relationship.
Gibbs et al. (2004), in their paper, call for different research methods, like field studies, in observing subjectivity in performance evaluation and its relationship with other behavioural elements, such as trust. It is through qualitative field studies that subjects of interest and their relationships can be better interpreted and understood, thanks to the simultaneous engagement of research questions, theory and data (Ahrens and Chapman, 2006). These three, taken together, allows to create linkages among empirical findings and existing theories, as the study unfolds (Ahrens and Chapman, 2006;Bansal and Corley, 2012), and to examine further theoretical concepts, which until now have received limited attention (Gibbs et al., 2004).
The design of this study comprises the conduction of semi-structured interviews with subordinates and supervisors coming from firms of different dimensions and sectors, but all operating in the same geographical area. This choice has granted the possibility to conduct the study with a wider sample of interviewees and to analyse the differences in perceptions in subordinate-supervisor relationships from both the interested parts’ viewpoints. This was useful in making comparisons and in developing findings since it allowed to report their opposing perspectives and to have an ongoing contrasting activity among these. Then, semi-structured interviews permitted to have a direct retrospective from those who experience, in first person, the performance evaluation procedure (Gioia et al., 2012).
Data Collection
I collected data using semi-structured, open-ended interviews with three categories of actors: subordinates, supervisors and directors of the personnel.
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The Construction of the Questionnaire
I have drawn up a first version of the questionnaire, which was sent to my supervisor to be reviewed and approved. The revised version of the questionnaire has been the one translated in Italian and used for the interviews.
Firstly, I prepared a set of general questions to start and focus the discussion (Appendix A). I have drawn up two different questionnaires: one for the supervisors and one for the subordinates (Appendix A). The general topic and questions for the two questionnaires are identical in many aspects, only some parts have been changed to be adapted to the position of superiority or subordination covered by the interviewee.
In order to ensure construct validity(McKinnon, 1988), I have designed questions to address the key theoretical constructs and main topics of interests (Strauss and Corbin, 1990; Patton, 2002; Yin, 2003). These have been: (1) the type of activity executed by the company and the job performed by the interviewee, (2) the evaluation procedure, (3) performance metrics adopted, with particular attention given to the types and circumstances in which they are used, (4) other factors that can influence the evaluation and (5) the supervisor-subordinate relationship and the influence of the performance evaluation on it.
The type of activity and the sector in which firms run their businesses is fundamental to understand the reasons that lie behind the choice of a particular evaluation procedure. Then, the description of the evaluation method and the qualitative and/or qualitative parameters chosen are necessary to observe procedures followed from companies. Finally, knowing about the supervisor-subordinate relationships is essential to appreciate how performance evaluation can influence and shape them.
For each of these five categories, I have prepared an average of three big questions and, for each of these, a broader set of follow up questions, in order to gain a deeper understanding of the subject matter or to clarify particular answers given.
The Conduction of the Interviews
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In order to be prepared to hold the interviews, I have outlined a more general questionnaire, comprised of ten big umbrella questions, based on the official questionnaire. This concise version of the questionnaire was used during the interview to guide the discussion and to focus it around the main themes of interest. However, depending on the answers given by the respondents, the questions and their order have been adapted to the specific situations. Thus, this second questionnaire was created to have a general guideline to be loosely followed during the interview. In the same way, the follow-up questions, included in the official version of the questionnaire, were asked depending on the answers given by the respondents and the lead the discussion took.
Interviews were all conducted in Italian and with face-to-face meetings. The length of them was between 30 and 90 minutes. Altogether nine interviews were tape-recorded, while, in the two cases for which the recording was not allowed, detailed notes were taken during the meeting. Then, I have transcribed and translated the interviews in English for approximately 40 single-spaced pages.
Appendix B: List of Interviews Conducted
No. Acronym
Position
Date
Duration
Recording
Method of
1 M01_S1 Sales and BusinessDepartments Manager 16-04-2018 30 minutes Notes and Transcription 2 M02_S2 General Manager 16-04-2018 45 minutes Notes and
Transcription 3 E03_S2 Sales and Personnel
Departments Manager 16-04-2018 1 hour Notes and Transcription 4 M04_S3 General Manager 19-04-2018 45 minutes Notes and
Transcription 5 M11_L8 General Manager 17-04-2018 30 minutes Notes and
Transcription 6 M06_L5 General Manager 10-04-2018 1 hour 30
minutes Notes 7 M05_L4 General Manager 17-04-2018 1 hour and 15
minutes Notes and Transcription 8 M09_L7 Personnel Director 11-04-2018 45 minutes Notes
9 E10_L7 Store Manager 11-04-2018 45 minutes Notes and Transcription 10 M07_L6 Personnel Director 19-04-2018 1 hour and 30
minutes Notes and Transcription 11 E08_L6 Store Manager 20-04-2018 45 minutes Notes and
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In total, I conducted 11 interviews (Appendix B): three with subordinates and eight with supervisors. I analysed eight firms: five operating in the manufacturing and two in the retailing sectors, but all located in Umbria. Among these eight firms, in terms of dimension, three are small and five big.
Data Analysis
I analysed the empirical material, gathered through the interviews, by means of a cross-case analysis. Primarily, I looked for differences and comparable patterns among different scenarios (Eisenhardt, 1989). I grouped firms around potential features of interest (such as the size or the sector of the firms), trying to develop different topics of significance in order to make the material more manageable (Gioia et al., 2012).
Then, once I have identified categories and grouped firms according to those, I have looked for and analysed within group similarities and intra-group differences.
In the end, I compared the different categories in pairs of two, according to one main big difference that distinguishes firms (e.g. small vs big firms, retailing vs manufacturing firms), highlighting and describing the main dissimilarities found. During this second phase of within-categories analysis, I looked among the emerging themes and features coming up from the various comparisons and I focused on those that could be more valuable in describing the phenomenon of interest (Gioia et al., 2012).
Small Large Manufacturing Manager (M01_S1) Manager (M02_S2) Subordinate (E03_S2) Manager (M04_S3) Manager (M05_L4) Manager (M06_L5) Manager (M11_L8) Services Manager (M07_L6) Subordinate (E08_L6) Manager (M09_L7) Subordinate (E10_L7)
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Firms Small Big Manufacturing Retailing Change
F1 X X F2 X X F3 X X F4 X X X F5 X X X F6 X X F7 X X F8 X X
Results
Small vs Big Companies
Differences in the Criteria Adopted
From the analysis of the interviews, it is revealed that the strongest differences in the type of performance evaluation adopted and in the evaluation procedure itself exist when a comparison is made between small and big firms.
Within bigger companies, it was observed, probably unsurprisingly, that the type of performance evaluation used is much more sophisticated, with criteria that concern very different aspects of the job executed by the employees, such as the technical competences, problem solving capabilities, leadership skills and others. These are implemented to render an appraisal of the performance that can be as detailed and complete as possible.
“For example, if we take in consideration the sales department, the evaluation of the single employee is made on the basis of the number of sales that had been taking place, the number of offers that are provided for negotiation [..], the rate of retention of the representatives and the rate of new customers each year. [..] Thus, this mix of elements at the end of the year determines the final evaluation given to each area manager. […]
In addition to this, other elements are taken into consideration when making the evaluation, such as the business conduct, the type and quality of relationships undertaken with external stakeholders, such as customers and representatives, the absenteeism percentage,...”1 (M11_L8)
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Thus, both pre-defined subjective and objective indexes were found to be officially followed by the companies to guide the performance evaluation procedure.
In smaller firms, instead, the evaluation is based on a much narrower set of indexes, which were mentioned to be neither officially adopted nor pre-defined by the superiors. The criteria mentioned for the evaluation were only a few and mainly objective.
“I basically take into consideration the productivity and capabilities of the employee. However, we are thinking to have a transition to a more articulated and sophisticated model, that can count on more numerical parameters and index such as the one often used within American firms.”2 (M01_S1)
Differences in the Evaluation Procedure
The substantial articulation of the evaluation procedure within bigger firms can be observed by the tendency to document it. Superiors keep written records of the evaluations, with the help of evaluation forms. Semi-annually or annually, each employee receives his/her evaluation form, with his/her specific parameters, which depend on the type of job conducted, the responsibilities assigned, the position and other differentiating elements. In smaller firms, instead, the employment of such forms was not mentioned by the interviewees.
These forms often comprise a section destined to an explanatory part, in which supervisors can insert personal comments and notes. In some cases, this part of the performance assessment is considered by the evaluators to be even more important than the evaluation itself. Accordingly, these sections leave space to the supervisors for arguing the marks given and the reasons behind them. The General Manager M06_L5 stressed out the meticulousness he dedicate to this explanatory part, which is so important inasmuch it allows the evaluator to legitimize the evaluation. In small firms, on the contrary, this lack of documentation may open the way to potential misunderstandings.
Another procedural peculiarity of bigger companies are the single, face-to-face meetings that supervisors have with their subordinates. During these meetings, the evaluation can be discussed extensively between the interested parties: the supervisor explain the reasons for the judgment given,
elementi determina la valutazione effettuata alla fine dell’anno per ciascun’area manager. [..] In più, altri elementi sono tenuti in considerazione nel momento della valutazione, come il comportamento aziendale, il rapporto con gli stakeholder esterni, come i clienti e rappresentanti, il livello di assenteismo e altri.”
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the subordinate can ask clarifications and space is left for debate and confrontation between the two. According to the interviewed supervisor M06_L5, this meeting with the subordinate is a “liturgical moment” of utmost importance during which the performance evaluation is debated between the interested parts “in a serious and professional way”. The importance of such moments was clearly stated by one of the interviewed subordinates E08_L6, as well:
“If a receive an evaluation form where I do not see my accomplishments fully reflected, but I am able to discuss about it with my supervisor to better understand the reasons behind that numbers, I am open to accept them and change my mind. Of course, if the evaluation is given and I do not think it has been done in a fair way and, then, I do not have the chance to discuss about it with my supervisor of course this could negative
impact my attitude.” 3 (E08_L6)
These moments of single confrontation between the superiors and their subordinates were not mentioned to happen in small firms, where the more frequent interactions among people all along the year make them probably unnecessary.
Then, in bigger companies, much more importance is given to the position and the level of training of the evaluator. Within those, the evaluator is a specific figure placed within the organizational hierarchy to perform this exclusive role. Thus, he/she has to have a certain type of experience and competences to provide performance evaluations. According to the interviewed supervisors, indeed, the evaluator’s training is crucial, if evaluation is to be delivered in an unbiased and accurate way to the employees.
“In order to be a good evaluator, you need to have competences, an adequate education and training and a certain level of experience within the field, if you want to give your
subordinates useful and appropriate evaluations of the performance.”4 (M07_L6)
In smaller companies, on the contrary, all these specifics never came up during the interviews, given that, due to the inherent characteristics of such businesses, it is the company owner who is in charge of the evaluation of the employees, being difficult to have alternatives, and who may not be expressly
3“Se ricevo una valutazione all’interno della quale non vedo interamente riflessi i miei risultati, ma sono in grado di parlarne con il mio superiore, per capire le ragioni che stanno dietro quei numeri, sono aperto ad accettarli e cambiare idea. Ovviamente, se la valutazione è assegnata e io non penso sia stata eseguita giustamente e, poi, non ho la possibilità di parlarne con il mio superiore ovviamente questo potrebbe impattare negativamente la mia predisposizione nei suoi confronti.”
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trained for that. Therefore, employees may develop certain types of expectations from their supervisors’ conduct during the evaluation.
In sum, the position and level of training of the supervisor are fundamental for the evaluation of the employees in large companies. These specifics of the evaluator are crucial in determining his/her capabilities in providing performance appraisals that can be as complete and unbiased as possible. This meaning that the evaluation rendered is both impersonal, thus not dependent upon personal preferences and judgements of the evaluator, and exhaustive, thus meaning that all the relevant aspects of it are estimated. These prerogatives were strongly remarked by the Personnel Director M07_L6:
“[..] Thus, we need to be cautious when evaluating the employees and not make the evaluation fall under too much subjective parameters, totally disconnected from the context taken into examination and totally depending on the preferences and characteristics of the evaluator.”5 (M07_L6)
Small
Large
Criteria Few
Mainly Objective
Many
Objective and Subjective
Target Not Set in Advance Set in Advance
Documentation Not Mentioned Written Evaluation Form Descriptive Part
Performance Review Not Mentioned Periodical
Position of the Evaluator Business Owner General Manager Personnel Director
Requirements for the Evaluator
Not Mentioned Training/Experience Impersonal Judgement
5“Quindi, dobbiamo essere cauti quando valutiamo i lavoratori e cercare di non far ricadere la valutazione entro dei parametri che siano troppo soggettivi e personali, totalmente distaccati dal contesto preso in esame ed
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Finally, it is worth noticing that in small companies subjectivity derives from the absence of a formalization and documentation of the evaluation procedure and of the criteria followed, which leave the evaluators with a great space of freedom, when assessing the subordinates’ performances. In fact, interviewed supervisors affirmed to be driven by objective quantitative parameters, concerning mainly productivity, when doing performance evaluation, but they also made clear that they are free to consider whichever aspects they prefer. Conversely, in larger companies, subjectivity is the consequence of the systematic documentation, either through wide set of metrics or comments, communication and discussion among parties all along the evaluation process, which make the evaluation more “intra-subjective”, rather than purely subjective.
Differences in Perceptions and Relations
Considering all these differences, i.e. the types and variety of criteria adopted (more or less subjective or objective), the evaluation procedure, and the different expectations towards the evaluators, it is possible to underline the corresponding consequences.
Within larger firms, employees are evaluated on the basis of pre-defined and targeted parameters and they have the faculty to debate and discuss about the evaluation received with their superiors, leaving little space for misunderstandings. Then, they can count on individualized feedbacks, and they expect to receive a fair evaluation.
Within both small companies, the adoption of such types of evaluation had not proven to be satisfactory enough and to cause some internal issues. The General Manager M01_S1 manifested the willingness from the company to upgrade the evaluation system. He addressed the intention to both introduce a more articulated one, with subjective parameters, that can assess the employee’s suitability for the job and not only his/her technical capabilities. He also mentioned the inclination to formalize the evaluation procedure through the adoption of formal schemes, which set target values and give numerical outcomes, on the basis of which making the evaluation. The absence of a well-defined procedure to be followed step-by-step for the evaluation, with, for example, evaluation forms for each employee and face-to-face feedback sessions between the subordinate and the supervisor, could set a fertile ground for misunderstandings and conflict.
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In addition, the on-going contact between supervisor and subordinates, within small firms, may negatively influence the impartiality of the first ones. Employees execute their job side by side with their supervisors, which may facilitate the establishment of close human relationships between them. In the end, this may bias the perceptions of the supervisors, who may be influenced by the affinities with employees, when judging their performances. Indeed, as recognized by the interviewees M01_S1 and M02_S2, some kind of impartiality and preference exist in such modest companies where, in the majority of cases, you have been working together for a long time and you know each of your collaborators well. In his interview, the supervisor M02_S2 has recognized how the type of relationships that you have with your subordinates and the proximity with them can influence judgements when evaluating them, despite the efforts made to avoid being partial. In the same way, the respondent M01_S1 acknowledged the possibility of emergence of such bias during the evaluation and the threat of their negative effects, both for the company and for the motivation of the subordinates, who realize that partiality in judgement may exists and whose attitude towards their job may be negatively shaped:
“Of course, this could affect the relationship with the other subordinates, who could have sentiments of jealousy or dissatisfaction seeing that they receive a different treatment of other peers. But, again, I think it is normal that these kinds of things could happen.
”
6Thus, supervisors from small firms have to force themselves much harder to give unbiased evaluations to their employees in comparison to supervisors of bigger companies. Within large firms, indeed, the higher turnover of human resources and the distance among people in the execution of the working activities prevent the construction of personal relationship, which may limit the threat of partiality in judgements.
In this sense, the lack of a person expressly in charge of performance evaluation, within small firms, or the devoid of the needed training from business owners , required to assess performances properly, could encourage the production of even more biased or unfair evaluations.
However, it is necessary to recognize that the possibility of bias in evaluation was mentioned by supervisors coming from big firms, as well. The supervisor M09_L7, who is the personnel director of a big company of around a thousand employees, has indicated how the performance evaluation is a moment of confrontation where human have to judge other humans and that, therefore, will always be partially subjective. Nonetheless, the second interesting result of the study is that subjectivity can be
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differently interpreted and used by the supervisors, with different consequences for the relationship with their subordinates.
If within smaller companies subjectivity is intended as the human tendency of the evaluator to be partial in the evaluations of the subordinates, with negative consequences for his critical sensibility, within bigger companies, instead, subjectivity is seen as a tool that can be actively used by the supervisors in order to deliver a performance assessment of higher quality, in terms of accuracy and thoroughness. In fact, within one of the two small firms considered, when the discussion begun to focus around the effects of performance evaluation on subordinate-supervisor relationships, the interviewed supervisor M01_S1 manifested more than once his tendency to be partial in evaluations. This, in his opinion, is due the human relationship that you tend to build with people and to the inclination to be influenced in judgements by particular features of the employees that, as a person, you may favour and appreciate. Respondents from big companies, on the contrary, when faced with the same type of questions, undertook a different line of reasoning concerning subjectivity. If most of them recognized that subjectivity is inescapable when making evaluations and the importance of having some types of filters, “in order to counter-balance the effects of the personalized judgements and opinions of the evaluator” (Interviewee M07_L6), they also argued how this same subjectivity can be used to assess performances more fairly. They often mentioned the importance of considering the context and the circumstances and not to deliver impersonal performance evaluations, based only on numerical outcomes of parameters. In this sense, the respondent M11_L4 mentioned occasions during which he prefers to examine with more attention the professional behaviour of the employee, rather than the achieved results, when evaluating performance. The circumstances suggested, in this sense, were about the employee living a moment of personal crisis or the missed achievement of organizational targets, due to external uncontrollable factors. Following the same line of reasoning, the supervisor respondent M06_L5 made in his answers a very similar claim, also adding:
“[..] A good evaluator should take into account the context. Let’s, for example, consider flexibility, which is a very important element for an employee, in general. However, a supervisor, might want to see high levels of this feature in employees who works for particular functions, such as marketing and R&D, while for other functions, such as accountancy and controlling, the supervisor might prefer lower levels of it.”7
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In smaller companies, it was admitted by the evaluators themselves how the partiality in judgement could create “jealously, dissatisfaction and mistrusts” (M01_S1) among the employees. In addition, the absence of face-to-face meetings between the supervisor and subordinates and of evaluation forms for each employee could jeopardize efforts made to build a trust relationship. In these companies, the importance of and need for trust was never mentioned by the interviewees. Conversely, according to the supervisor M01_S1, resentment and frustration felt among the subordinates towards his regards were less the consequence of an unhealthy relationship between them, and more the result of the workers’ wrong attitude and of their unwillingness to be challenged:
“Thus, I am fully aware of such threats and I try to avoid them as much as I can. Anyway, on the other hand, I also think that subordinates should interrogate themselves when they see differences in the relationship with their supervisor and try to understand why there is such a different attitude from me.”8
At the same time, within bigger firms, the interviewed evaluators stated in many cases automatically the importance of trust as the underpinning element for an upright supervisor-subordinate relationship:
“[..] Thus, if at the basis of the relationship between a supervisor and his subordinates an honest, transparent and trustworthy relationship exists, where everybody work together towards the same objective, it is difficult that the moment of the performance evaluation could negatively influence such relationship.”9 (M11_L8)
The same respondent also mentioned the importance for the evaluator, for such type of relations to be established, to be a good role model. According to him, giving the good example is a necessary action that need to be taken by supervisors, in order to gain credibility and the acceptance from his subordinates, if they are willing to build a bidirectional trustworthy relationship with them.
Thus, the aforementioned differences in the types of performance evaluation adopted and the social proximity among people, which tend to bias evaluations, have different effects on trust in the subordinate-supervisor relationship, within the two types of firms. Such effects, then, may be exacerbated further by the different conception and use that is made of subjectivity from supervisors.
8“Quindi sono perfettamente conscio di certi rischi e provo ad evitarli per quanto più possibile. Però, d’altro canto, penso che gli impiegati dovrebbero porsi delle domande quando vedono un differente tipo di rapporto dei loro colleghi con il supervisore e cercare di capire la ragione per cui certe differenze nell’atteggiamento esistano da parte mia.”
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Manufacturing vs Retailing Companies
Differences in the Criteria Adopted
Both the companies engaged in the retailing sector analysed adopt performance appraisal systems that rotate around employees’ “soft-skills” (interviewee M09_L7). In this sector, employees work in public places and the most important aspects of their job are the customer experience and satisfaction during the shopping activities. As mentioned by the personnel director M09_L7, employees working in the flagship stores of the company are evaluated on the basis of some objective parameters and KPIs, such as the knowledge of the selling strategies, the value of the average receipt, the conversion rate, ext. However, these indexes constitute a less relevant part of the evaluation scheme, where greater attention is given to the appraisal of the soft-skills of the employee, such as the empathy, the relational capabilities, the problem-solving attitude or the stress-management.
Companies operating in the manufacturing sector, instead, demonstrated to have evaluation schemes in which the central element is the appraisal of the so-called, “hard-skills” (interviewee M09_L7), meaning the employee’s technical competences, their level of know-how and the achievement of the established productivity targets. In certain types of companies, as underlined by the General Manager M05_L4, “productivity is fundamental”. Then, he illustrated the steps of the evaluation process and the relevant aspects considered to assess the employees’ performances.
“Every year we have a meeting with the employees for each productive plant during which together we look at the main goals for the year. These are the basis for the quantitative evaluation of the performance. They are “the numbers” of the performance evaluation scheme. However, then, in a single department we look at other specific parameters for the single worker, such as the hours of overtime work. [..] Other
parameters are the vacation days, productivity, days off for injuries and illness, which are very important since they are able to influence the different items of the financial
statement.”10 (M05_L4)
Thus, seems that firms operating in the manufacturing sector give the greater attention to the themes of productivity, operating costs and profit margins, which are the fundamental aspects to consider, if companies want to achieve profitable results and continue their activity. Employees, then, are evaluated considering parameters that can describe their capabilities and efficiency in contributing to the achievement of organizational goals.
10“Ogni anno abbiamo un incontro con i lavoratori di ciascun impianto produttivo durante il quale guardiamo insieme agli obiettivi produttivi per il periodo. Questi sono alla base della valutazione quantitativa della
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Therefore, we can say that manufacturing firms, in our field, make use of evaluation forms more focused on objective indexes, while evaluation forms, for retailing sector companies, leave more space for subjective elements and indicators, more difficultly ascribable to numbers and mathematical formula.
Differences in the Evaluation Procedure
Another difference between the two sectors, which is highly dependent on the type of evaluation scheme adopted (i.e. more objective or subjective), concerns the assignation of bonuses and rewards. In manufacturing firms, it was reported the assignation of economic bonuses to the employees related and consequent to the evaluation process. In all the cases, the achievement of certain productivity targets, the fulfilment of a certain number of commissions in time and, in general, the attainment of positive economic results, are used both to evaluate the performance of the employees and to determine their rewards. Bonuses, together with the performance evaluation, are also used as motivational tools implemented to push the manufacturers to put more effort in their job. This evidence was clearly stated by the supervisor M04_S3 of a medium company, when asked about the effects of their introduction:
“It has positively influenced the motivation of the employees in the manufacturing areas since, differently from the past, they know that if they want to increase their returns, they can do it by being more active and participating in their working activity. [..]” 11 (M04_S3)
For retailing firms, instead, a different tendency was reported. The personnel director M07_L6 explained how the modality of rewarding employees has been changing lately through the introduction of incentives given to the employee for enriching their professional background, such as conventions to attend University, training workshops and language courses. Conversely, the supervisor M09_L7 stated that rewarding schemes and performance evaluation have to remain separated, and, then stressed the importance of performance evaluation as a strategic and motivational tool necessary for employees to grow professionally.
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Manufacturing
Retailing
Criteria
Mainly Objective Mainly SubjectiveParameters
Technical Capabilities Hard Skills Productivity Relational Capabilities Soft Skills Customer SatisfactionIncentives Linked to
Performance Evaluation
Yes NoType of Reward
Economic Incentives Productivity BonusesNot Economic
Incentives for further training
Work-related Motivation
Economically-driven Professional Growth-drivenDifferences in Perceptions and Relations
Therefore, both in manufacturing and retailing companies, the performance evaluation is used as a motivational instrument to stimulate employees to work more and better, which, however, is hinging on different assumptions. In manufacturing firms, the motivation is sustained by economic incentives, while, in retailing firms, by the employees’ professional growth.
This difference suggests that, in retailing firms, building a trusty subordinate-supervisor relationship could be easier. Both parts are conscious that the evaluation has the only scope to assist the development of the subordinate’s professional competences, leaving less space for self-serving behaviours of the employees. This point was highlighted by both the subordinates and the superiors that have been interviewed.
“If the supervisor is able to communicate his subordinates clear organizational goals and what everybody within the company need to do in order to achieve them and if the subordinates are able to keep a positive attitude towards their supervisors, the evaluation becomes a moment of confrontation and growth.” 12 (E10_L7)
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In manufacturing firms, on the contrary, the presence of bonuses could make the practice more laborious. The economic element could lead employees to manipulate incentives and to distort organizational goals in order to maximize their returns in the short run. When supervisors were asked about the possibility of such threats, they all mentioned the importance for organizations to communicate their employees clear goals and to involve them in their definition, and for supervisors to guide subordinates towards their achievement.
“Together, we define targets to be reached, strategies to be implemented and goals. All together, we define the future for the firm, both in the short and long run. [..] Thus, for me, it can always exist the risk of manipulation of incentives; however, if this risk is treated in a cautious way, it can be minimized. It is responsibility of a good general manager and supervisor to be able to handle also such aspects and issues.”13 (M11_L8)
Companies that have changed their evaluation schemes
Among all the five big companies analyzed, two of them were found to have recently encountered a remarkable process of change of the evaluation scheme.
One of the big companies considered has been protagonist in the past years of a major change in the evaluation procedure. The General Manager M05_L4 described how he was hired by the CEO of the company, during a moment of heavy economic crisis, with the scope of changing the internal management control tools in order to manage human resources more effectively. The General Manager introduced a more structured evaluation scheme for the estimation of the manufacturers’ performance within productive plants, with the establishment of indexes that could keep trace of the productivity, presence on the working environment, level and quality of the output for each employee. He described how he enhanced this passage from a totally subjective and underdeveloped evaluation procedure to another one more articulated and objective, which could count on fixed and definite numbers:
“[..] Secondly, we have to consider that this company used to make evaluations of the performance only on the basis of entirely subjective elements, without considering objective parameters. “Is it a good boy? Is it a good agent?” I can agree with such aspects, but one important element was missing: “Which are his competences? Competences are essentials to organize work and to assign role and responsibilities, since it is required a combination of both personal characteristics and professional skills. [..] That is why the quantitative
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component of the performance evaluation, which the company used to underestimate before, has become a central player and element to consider.” 14
The superior M05_L4, then, mentioned the importance of such upgrade in performance evaluation under both the perspectives of the attainment of positive economic results and of the motivation of the employees. Before, indeed, bonuses were awarded to each employee in the same way, independently from the quality of the job executed, while now distinctions are made based on the value of the single employee, enhancing sentiments of meritocracy and satisfaction among workers.
“[..]There is also another aspect to consider: before the bonus was assigned to everybody, independently from the quality of the job executed. Therefore, this has generated
problems in terms of meritocracy since the single employee, who had put more effort in his job and performed it better than the others, was not able to see such difference at the end of the year in the rewarding scheme..”15 (M07_L6)
The uprooting of the old method in favor of a more meticulous one was at the basis of the use of the performance evaluation as a motivational tool. Indeed, the supervisor M07_L6 stated how now employees are motivated to do more and better their job, being aware that this will produce positive results, which will be recognized and awarded in a meritocratic way by the supervisors.
The General Manager M06_L5 from a big company of a more of a thousand of employees joined the company lately introducing a further development of the evaluation scheme and procedures adopted. In this case, even if the firm is a manufacturing one as well, the changing process of performance evaluation followed an opposite direction in comparison to the firm analyzed beforehand. The superior interviewed has been modeling the evaluation system with a transition from a more objective towards a more subjective one. He has encouraged the introduction of qualitative, non-financial parameters within the evaluation form that, together with the old objective criteria, can guide the assessment of the performance. These ones concern different aspects of the employees, such as attitude within the
14“[..] Secondo, dobbiamo considerare che questa impresa era solita effettuare valutazioni sulla base di elementi puramente soggettivi, senza considerare elementi oggettivi. “È un bravo ragazzo?” “È un bravo impiegato?” Posso essere d’accordo su alcuni di questi aspetti, ma un elemento fondamentale era mancante: “Quali sono le sue competenze?” Le competenze sono fondamentali per organizzare il lavoro e per assegnare ruoli e responsabilità, in quanto è richiesta la combinazione di caratteristiche personali e competenze professionali. [..] Ecco perché
l’elemento quantitativo della performance, che questa società sottovalutava in passato, è diventato un aspetto centrale da tenere in considerazione.”
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working environment, past experiences, relationships between them and the peers and superiors. In addition, it was included an explanatory part, where the evaluator needs to carefully explain the reasons for the global judgment assigned to the subordinate.
According to the General Manager M06_L5, this was a necessary step to be taken in order to efficiently use performance evaluation in a strategic and functional way, designed to reach organizational goals. Human resources, in his opinion, are one of the main assets on which a company can count and, therefore, under this perspective, employees’ performance evaluation becomes a fundamental strategic tool for firms, if it is designed in the most suitable way for the specific organizational context and needs.
“In order to be capable of motivating the human resource to carry out his job in the best way he can, three elements are essential in my opinion: sharing the same values and principles with him, listening to the his specific needs and requirements in order to make him develop towards a compatible area with those and to highlight the shortcomings and flaws of the company, in order to be capable of investing on these deficient aspects, which are subjective for each company, and, thus, to fill this gap providing human resources with the necessary skills and tools.”16 (M06_L5)
Large Companies
L4
L5
L6
L7
L8
Change Process
X XNew External Figure
X XObjective Parameters
X X X XSubjective Parameters
X X X XMotivational and
Meritocracy-related
Issues
X X28
Differences in Perceptions and Relations
Thus, in conclusion, we can see how both the firms considered were implementing a totally objective or subjective evaluation method and how they have been balancing and mediating such absolutism towards one model or the other. Conversely, the other big firms analysed (who are using evaluation schemes more balanced between subjective and objective elements) have affirmed to be satisfied with those and that they are only considering applying further refinements.
Within the two firms that have brought such a change, the upgrade was due in all cases to a sentiment among employees of a general lack of meritocracy and fairness in the performance evaluation. Firstly, the development of similar sentiments among employees had negatively influenced their attitude towards their supervisors, who were seen as not able to return fair and meritocratic performance assessments. Secondly, these negative feelings brought to a decrease in employee’s motivation since they have become aware that to a different conduct in the working life would have not corresponded a different evaluation.
Both firms encountered a process of change which was very much alike in terms of the desired final outcome, but for which the direction taken was exactly the opposite. Within both firms, indeed, the change agents interviewed mentioned their primary willingness to introduce a balanced evaluation scheme, in terms of parameters implemented. However, in one case, the passage was from a totally subjective towards a more objective one and, in the second case, the transition was exactly the opposite. This observation could lead to the conclusion that having an evaluation scheme that is entirely sticking to one model (i.e. totally objective or subjective) could be counterproductive for firms, in terms of employees motivation and satisfaction with the evaluation method currently in use. This could be explained by the fact that, to appraise employees’ performance in a comprehensive way, it is required the presence of both criteria, which take in consideration very different aspects.
Discussion and Conclusions
In this paper, I investigated how perceived fairness in performance evaluation among employees can influence the level of trust towards supervisors. I gave my contribution to this stream of research by conducting a field study during which I entered in contact with the protagonists of performance evaluation and of subordinate-supervisor relationships.
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formalization of the procedure influence the perceived accuracy and justice of them among employees and how these could interact and influence the subordinates‘ trust towards the supervisors.
Small and Large Companies
Through a cross-case analysis, it is revealed that, within the manufacturing sector, firms make use of evaluation systems hinging on objective, financial criteria, softened, in some cases, by a subjective touch. Within the services sector, instead, firms adopt evaluation systems that are mainly subjective, making greater use of non-financial criteria.
This different approach for the evaluation has a direct impact on the implemented rewarding schemes. Within manufacturing firms, economic bonuses were reported to be widely used to motivate employee. To contain the threat of incentives’ manipulation (Baker, 1992; Holmstrom and Milgrom, 1991), managers mentioned to adopt organizational philosophies in line with participative budgeting theory. They define organizational goals together with the employees, in order to motivate and make them feel committed to their achievements. In this way, they align subordinates’ efforts to the organization goals, with positive effects in terms of procedural fairness, interpersonal trust and goal commitment (Shohilin, 2011; Lau and Tan, 2006; Wentzel, 2002). Within retailing firms, instead, economic bonuses were observed to be independent from the evaluation procedure, being this one made with the only scope to make the employee grow professionally.
Then, the analysis reveals that small and large firms differ a lot between themselves in terms of formalization and documentation of the evaluation procedure.
Small firms adopt modest evaluation systems, consistently with the organizational dimensions. This lack of sophistication is most likely the result of the limited organizational size and workforce, which do not require complex management control tools to be managed efficiently.
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qualitative, non-financial parameters, being the employee’s tasks much more vague and the type of responsibilities different.
The formal adoption of standards and pre-defined targets from large companies, which was not mentioned to happen within smaller firms, derives from the need to formalise processes in order to motivate employees towards unambiguous goals (Lau and Shohilin, 2005). Within small firms, instead, such necessity is probably not felt by supervisors, who are in constant contact with their subordinates and can communicate them directly goals and expectations.
This proximity between subordinates and supervisors may also explain the lack of written documentation concerning performance evaluation. General Managers engage with a limited number of employees, who they usually know well. For this reason, they may not need to keep a written record of evaluations done to remember and distinguish performances among employees. However, this shortage of documentation may affect the employees’ perceived accuracy of the procedure (Heslin and Walle, 2011; Greenberg, 1987). In large firms, instead, supervisors have a different type of relationship with employees and they tend not see themselves often. These elements recall for the need of having everything documented and formalised, with a positive influence on employees’ perceived procedural fairness and trust towards the supervisor (Chen et al., 2011; Folger and Konovsky, 1989).
Additionally, within small firms the on-going contact among subordinates and supervisor may explain the absence of face-to-face single meetings. People relate between themselves often reason why, if any kind of comments has to be given, this will happen in a real-time moment, with plenty of opportunities for immediate feedbacks from the supervisor (Bol, 2011; Levy and Williams, 2004). In larger companies, instead, where organizational actors engage with each other’s rarely and work distantly, there is the necessity to set a specific appointment between the subordinate and the supervisor to discuss about the evaluation (Konovsky and Cropanzano, 1992). During these meetings, employees can express their perspectives and raise questions, with a positive influence on their attitude toward the evaluation moment (Pooyan and Eberhardt, 1989; Dipboye and Pontbriand, 1981). Literature demonstrated the positive effects that high-quality feedbacks have on subordinates’ trust levels towards the supervisor, consequently to the increased perceived fairness in formal evaluation procedures (Hartman and Slapnicar, 2009; Lau and Buckland, 2005).
