What Do Performance Appraisals Do?
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.
We are grateful to seminar participants at University of Maryland, MIT, and the University of Pennsylvania for helpful comments. We especially thank David Almeda for discussions and access to the data used in this study. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Peter Cappelli & Martin J. Conyon, 2018. "What Do Performance Appraisals Do?," ILR Review, vol 71(1), pages 88-116. citation courtesy of