Skip to main content
SpringerLink
Log in

Likeability in subjective performance evaluations: does it bias managers’ weighting of performance measures?

  • Original Paper
  • Published:
Journal of Business Economics Aims and scope Submit manuscript

Abstract

In this paper, we investigate how subordinate likeability induces bias in managers’ subjective performance evaluations. Based on the affect-consistency heuristic, we expect managers who use multiple performance measures to subjectively evaluate their subordinates’ performance to place greater weight on likeability-consistent performance measures than on likeability-inconsistent measures. Hence, we predict that likeability and performance information interact in affecting managers’ performance evaluations. The results of our experiment support this prediction. In line with prior research, we find evidence of likeability bias in subjective performance evaluations: likeable subordinates receive more favorable evaluations than dislikeable ones. We further find that participants adjust their performance evaluations in the presence of likeability-consistent performance information to a greater extent than in the presence of likeability-inconsistent performance information. Thus, in accordance with the affect-consistency heuristic, our results indicate that likeability bias occurs due to a differential, biased weighting of performance measures. Additionally, we find that perceived likeability is also affected by subordinates’ performance, which in turn partially mediates the effect of subordinate performance on evaluations: good performers are more likeable than poor performers. Hence, this can exacerbate likeability bias. We discuss the implications of our findings for the design of performance evaluation systems in practice.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. As we will outline in more detail in Sect. 2, psychology research usually entails participants directly observing behavior during evaluation tasks, while in the business context, managers often have to rely on multiple performance measures to evaluate subordinates. This may trigger different cognitive processes.

  2. Other, non-dyadic settings include calibration committees (e.g., Demeré et al. 2018), where multiple managers are involved in the evaluation of a single employee, or team settings (e.g., Arnold and Tafkov 2019) in which a manager evaluates multiple employees simultaneously and allocates bonuses.

  3. This is one of the initial reasons why performance evaluation as an element of management control is warranted.

  4. For example, in such a case, it is not necessary to first encode performance as ‘good’ or ‘bad’ since a comparison of target and actual values directly classifies performance. In this regard, the literature also suggests that likeability should have less influence in the presence of clear performance targets (Kaplan et al. 2007; Baltes and Parker 2000).

  5. There are numerous possible examples of factors that might cause managers to perceive subordinates as likeable that are irrelevant to performance evaluations, such as when a manager and a subordinate favor the same sports club or their children attend the same school.

  6. Salterio (2014) also stresses the importance of replication in accounting research. In particular, he outlines that the paper he co-authored with Marlys Lipe on the common measure bias (Lipe and Salterio 2000), which, like the present study, deals with managers’ weighting of performance measures in subjective performance evaluation, has been replicated at least 18 times. Prominent examples which have been published in major accounting journals include (but are not limited to) Banker et al. (2004), Dilla and Steinbart (2005), and Libby et al. (2004).

  7. For example, some authors suggest that managers generally provide inflated ratings to avoid confrontations (e.g., Bol et al. 2016).

  8. Regarding likeability, Robbins and DeNisi’s (1994) results also imply that affect-consistency is not associated with information acquisition.

  9. While not the focus of our paper, we note that the consciousness of this behavior is ambiguous. For example, Luft and Shields (2009) elaborate on motivated reasoning and outline that it affects individuals’ cognitive processes “…in ways of which individuals are not fully conscious.” (p. 234). We revisit this issue in our supplementary analyses.

  10. The research design initially featured two positive likeability treatments. By intention, they should affect performance evaluations differently. However, the second treatment did not significantly differ in its effect on performance evaluation. Furthermore, regarding the likeability manipulation check, both treatments yielded inferentially identical results. In order to retain a balanced sample, we refrained from pooling those treatment conditions but omitted this second likeability condition.

  11. Likewise, Carmona et al. (2014) presented two subordinates (one likeable, one dislikeable) simultaneously to each participant.

  12. This design choice follows related psychology research, which emphasizes the necessity of a control condition in settings such as ours (Kravitz and Balzer 1992).

  13. As we acknowledge that experiments should not strive for unnecessary mundane realism, we refrained from implementing real-world performance measures (e.g., customer satisfaction) but instead labeled the measures A, B, C, and D, respectively, to avoid that participants’ weighting of favorable and unfavorable performance information is confounded with their perceived importance of various performance measures (Kadous and Zhou 2018).

  14. “Michael” and “Schmitz” are among the most common German first and family names, respectively. We, therefore, expect that any positive or negative connotations would be non-systematic and, due to experimental randomization, would not affect our results.

  15. A stream of methodologically oriented studies addresses the topic of using students in accounting-related judgment and decision-making experiments (e.g., Elliott et al. 2007; Libby et al. 2002; Ashton and Kramer 1980). The results obtained by Elliott et al. (2007) suggest that as long as the cognitive complexity of the task does not exceed the capabilities of the students, the results can be transferred to real-world decision-makers. Libby et al. (2002) even conclude that researchers should refrain from using professionals unless necessary. Schwering (2017) argues that students should not be used as surrogates for managers if managers’ experience is important to the task but that in tasks that do not require such experience, real managers’ reliance on experience may indeed be a confounding factor. As our task does not necessarily require expertise and students’ cognitive processes are assumed not to differ from practitioners’ cognitive processes in the experimental task, using a student sample is deemed suitable for answering our research question.

  16. All analyses have been replicated using the full sample where possible; effects stay inferentially identical.

  17. We conducted the experiment paper-based and the original language of the materials was German.

  18. In practice, firms are usually unable to incentivize managers to provide accurate performance evaluations as this would imply the possibility of determining objectively what constitutes an accurate performance evaluation (Ding and Beaulieu 2011). However, subjective performance evaluations are especially well-suited mechanisms in cases where such objective performance evaluations are not determinable.

  19. The deviation from the neutral condition within the diagnostic performance measure was equal-in-magnitude for the positive and negative performance conditions.

  20. Note that the sets of contrast weights used to test H2a and H2b all test for patterns that represent a combination of a likeability main effect and an ordinal interaction between likeability and performance information as our theory predicts (cf. Guggenmos et al. 2018). For example, in the case of our first contrast test, both the contrast weights for the neutral performance/positive likeability condition (− 1) and those for the positive performance/positive likeability condition (+ 4) are greater than the respective contrast weights for the neutral performance/control condition (− 2) and the positive performance/control condition (− 1), thus representing a main effect of likeability. However, the greater difference in contrast weights within the positive performance condition (+ 4 vs. − 1) than within the neutral performance condition (− 1 vs. − 2) tests the predicted ordinal interaction. Use of such contrast weights is in line with extant accounting literature (e.g., Tan et al. 2019; Koonce et al. 2019; Lambert and Agoglia 2011; Kadous et al. 2003).

  21. In line with this argument, the literature acknowledges that experiments are usually not well-suited to detect effect sizes which can be extrapolated to real-world settings but rather aim to test the direction of effects (Kadous and Zhou 2018).

References

  • Antonioni D, Park H (2001) The relationship between rater affect and three sources of 360-degree feedback ratings. J Manag 27:479–495

    Google Scholar 

  • Arnold MC, Tafkov ID (2019) Managerial discretion and task interdependence in teams. Contemp Account Res 36:2467–2493

    Google Scholar 

  • Ashton RH, Kramer SS (1980) Students as surrogates in behavioral accounting research. Some evidence. J Account Res 18:1–15

    Google Scholar 

  • Baltes BB, Parker CP (2000) Reducing the effects of performance expectations on behavioral ratings. Organ Behav Hum Decis Process 82:237–267

    Google Scholar 

  • Balzer WK (1986) Biases in the recording of performance-related information: the effects of initial impression and centrality of the appraisal task. Organ Behav Hum Decis Process 37:329–347

    Google Scholar 

  • Banker RD, Chang H, Pizzini MJ (2004) The balanced scorecard: judgmental effects of performance measures linked to strategy. Account Rev 79:1–23

    Google Scholar 

  • Bhattacharjee S, Moreno KK, Riley T (2012) The interplay of interpersonal affect and source reliability on auditors’ inventory judgments. Contemp Account Res 29:1087–1108

    Google Scholar 

  • Bol JC (2011) The determinants and performance effects of managers’ performance evaluation biases. Account Rev 86:1549–1575

    Google Scholar 

  • Bol JC, Kramer S, Maas VS (2016) How control system design affects performance evaluation compression: the role of information accuracy and outcome transparency. Account Organ Soc 51:64–73

    Google Scholar 

  • Buckless FA, Ravenscroft SP (1990) Contrast coding: a refinement of ANOVA in behavioral analysis. Account Rev 65:933–945

    Google Scholar 

  • Cardinaels E, van Veen-Dirks PM (2010) Financial versus non-financial information: the impact of information organization and presentation in a Balanced Scorecard. Account Organ Soc 35:565–578

    Google Scholar 

  • Cardy RL, Dobbins GH (1986) Affect and appraisal accuracy. Liking as an integral dimension in evaluating performance. J Appl Psychol 71:672–678

    Google Scholar 

  • Carmona S, Iyer G, Reckers PM (2014) Performance evaluation bias. A comparative study on the role of financial fixation, similarity-to-self and likeability. Adv Account 30:9–17

    Google Scholar 

  • Chen Y, Jermias J, Panggabean T (2016) The role of visual attention in the managerial judgment of Balanced-Scorecard performance evaluation: insights from using an eye-tracking device. J Account Res 54:113–146

    Google Scholar 

  • Dai NT, Kuang X, Tang G (2018) Differential weighting of objective versus subjective measures in performance evaluation: experimental evidence. Eur Account Rev 27:129–148

    Google Scholar 

  • Demeré BW, Sedatole KL, Woods A (2018) The role of calibration committees in subjective performance evaluation systems. Manag Sci 65:1562–1585

    Google Scholar 

  • DeNisi AS, Robbins TL, Summers TP (1997) Organization, processing, and use of performance information: a cognitive role for appraisal instruments. J Appl Soc Psychol 27:1884–1905

    Google Scholar 

  • Dilla WN, Steinbart PJ (2005) Relative weighting of common and unique Balanced Scorecard measures by knowledgeable decision makers. Behav Res Account 17:43–53

    Google Scholar 

  • Ding S, Beaulieu P (2011) The role of financial incentives in Balanced Scorecard-based performance evaluations: correcting mood congruency biases. J Account Res 49:1223–1247

    Google Scholar 

  • Elliott WB, Hodge FD, Kennedy JJ, Pronk M (2007) Are M.B.A. students a good proxy for nonprofessional investors? Account Rev 82:139–168

    Google Scholar 

  • Elliott WB, Jackson KE, Peecher ME, White BJ (2014) The unintended effect of corporate social responsibility performance on investors’ estimates of fundamental value. Account Rev 89:275–302

    Google Scholar 

  • Fanning K, Piercey MD (2014) Internal auditors’ use of interpersonal likability, arguments, and accounting information in a corporate governance setting. Account Organ Soc 39:575–589

    Google Scholar 

  • Farrell AM, Goh JO, White BJ (2014) The effect of performance-based incentivecontracts on system 1 and system 2 processing in affective decision contexts: fMRI and behavioral evidence. Account Rev 89:1979–2010

    Google Scholar 

  • Fehrenbacher DD, Schulz AK-D, Rotaru K (2018) The moderating role of decision mode in subjective performance evaluation. Manag Account Res 41:1–10

    Google Scholar 

  • Fehrenbacher DD, Kaplan SE, Moulang C (2019) The role of accountability in reducing the impact of affective reactions on capital budgeting decisions. Manag Account Res. https://doi.org/10.1016/j.mar.2019.100650

    Article  Google Scholar 

  • Feldman J (1981) Beyond attribution theory: cognitive processes in performance appraisal. J Appl Psychol 66:127–148

    Google Scholar 

  • Festinger L (1957) A theory of cognitive dissonance. Stanford University Press, Radwood City

    Google Scholar 

  • Foti RJ, Hauenstein NM (1993) Processing demands and the effects of prior impressions on subsequent judgments: clarifying the assimilation/contrast debate. Organ Behav Hum Decis Process 56:167–189

    Google Scholar 

  • Guggenmos RD, Pierce MD, Agoglia CP (2018) Custom contrast testing: current trends and a new approach. Account Rev 93:223–244

    Google Scholar 

  • Haynes CM, Kachelmeier SJ (1998) The effects of accounting contexts on accounting decisions: a synthesis of cognitive and economic perspectives in accounting experimentation. J Account Lit 17:97–136

    Google Scholar 

  • Kadous K, Zhou Y (2018) Maximizing the contribution of JDM-style experiments in accounting. In: Libby T, Thorne L (eds) The Routledge companion to behavioural accounting research. Routledge, London, pp 175–192

    Google Scholar 

  • Kadous K, Kennedy SJ, Peecher ME (2003) The effect of quality assessment and directional goal commitment on auditors’ acceptance of client-preferred accounting methods. Account Rev 78:759–778

    Google Scholar 

  • Kang G, Fredin A (2012) The balanced scorecard: the effects of feedback on performance evaluation. Manag Res Rev 35:637–661

    Google Scholar 

  • Kaplan SE, Petersen MJ, Samuels JA (2007) Effects of subordinate likeability and Balanced Scorecard format on performance-related judgments. Adv Account 23:85–111

    Google Scholar 

  • Kaplan SE, Petersen MJ, Samuels JA (2017) Further evidence on the negativity bias in performance evaluation: when does the evaluator’s perspective matter? J Manag Account Res 30:169–184

    Google Scholar 

  • Kaplan SE, Samuels JA, Sawers KM (2018) Social psychology theories as applied to behavioural accounting research. In: Libby T, Thorne L (eds) The Routledge companion to behavioural accounting research. Routledge, London, pp 497–506

    Google Scholar 

  • Kida TE, Moreno KK, Smith JF (2001) The influence of affect on managers’ capital-budgeting decisions. Contemp Account Res 18:477–494

    Google Scholar 

  • Koonce L, Leitter Z, White BJ (2019) Linked balance sheet presentation. J Account Econ 68:1–16

    Google Scholar 

  • Kramer S, Maas VS (2019) Selective attention as a determinant of escalation bias in subjective performance evaluation judgments. Behav Res Account. https://doi.org/10.2308/bria-18-021

    Article  Google Scholar 

  • Kravitz DA, Balzer WK (1992) Context effects in performance appraisal: a methodological critique and empirical study. J Appl Psychol 77:24–31

    Google Scholar 

  • Kunda Z (1990) The case for motivated reasoning. Psychol Bull 108:480–498

    Google Scholar 

  • Lambert TA, Agoglia CP (2011) Closing the loop: review process factors affecting audit staff follow-through. J Account Res 49:1275–1306

    Google Scholar 

  • Lefkowitz J (2000) The role of interpersonal affective regard in supervisory performance ratings: a literature review and proposed causal model. J Occup Organ Psychol 73:67–85

    Google Scholar 

  • Libby R, Bloomfield R, Nelson MW (2002) Experimental research in financial accounting. Account Organ Soc 27:775–810

    Google Scholar 

  • Libby T, Salterio SE, Webb A (2004) The Balanced Scorecard: the effects of assurance and process accountability on managerial judgment. Account Rev 79:1075–1094

    Google Scholar 

  • Lipe MG, Salterio SE (2000) The Balanced Scorecard: judgmental effects of common and unique performance measures. Account Rev 75:283–298

    Google Scholar 

  • Luft J, Shields MD (2009) Psychology models of management accounting. Found Trends Account 4:199–345

    Google Scholar 

  • Maas VS, Torres-González R (2011) Subjective performance evaluation and gender discrimination. J Bus Ethics 101:667–681

    Google Scholar 

  • Maas VS, Verdoorn N (2017) The effects of performance report layout on managers’ subjective evaluation judgments. Account Bus Res 47:731–751

    Google Scholar 

  • Maas VS, van Rinsum M, Towry KL (2012) In search of informed discretion: an experimental investigation of fairness and trust reciprocity. Account Rev 87:617–644

    Google Scholar 

  • Miller G (1956) The magical number seven, plus or minus two: some limits on our capacity for processing information. Psychol Rev 63:81–97

    Google Scholar 

  • Moers F (2005) Discretion and bias in performance evaluation: the impact of diversity and subjectivity. Account Organ Soc 30:67–80

    Google Scholar 

  • Moreno KK, Kida TE, Smith JF (2002) The impact of affective reactions on risky decision making in accounting contexts. J Account Res 40:1331–1349

    Google Scholar 

  • Ravenscroft SP, Buckless FA (2018) Contrast coding in ANOVA and regression. In: Libby T, Thorne L (eds) The Routledge companion to behavioural accounting research. Routledge, London, pp 349–372

    Google Scholar 

  • Reilly SP, Smither JW, Warech MA, Reilly RR (1998) The influence of indirect knowledge of previous performance on ratings of present performance: the effects of job familiarity and rater training. J Bus Psychol 12:421–435

    Google Scholar 

  • Robbins TL, DeNisi AS (1994) A closer look at interpersonal affect as a distinct influence on cognitive processing in performance evaluations. J Appl Psychol 79:341–353

    Google Scholar 

  • Robbins TL, DeNisi AS (1998) Mood vs. interpersonal affect: identifying process and rating distortions in performance appraisal. J Bus Psychol 12:313–325

    Google Scholar 

  • Robertson JC, Stefaniak CM, Curtis MB (2011) Does wrongdoer reputation matter? Impact of auditor-wrongdoer performance and likeability reputations on fellow auditors’ intention to take action and choice of reporting outlet. Behav Res Account 23:207–234

    Google Scholar 

  • Salterio SE (2014) We don’t replicate accounting research—or do we? Contemp Account Res 31:1134–1142

    Google Scholar 

  • Schick AG, Gordon LA, Haka S (1990) Information overload: a temporal approach. Account Organ Soc 15:199–220

    Google Scholar 

  • Schwering A (2017) The influence of peer honesty and anonymity on managerial reporting. J Bus Econ 87:1151–1172

    Google Scholar 

  • Shields MD (2015) Established management accounting knowledge. J Manag Account Res 27:123–132

    Google Scholar 

  • Sohn M, Hirsch B, Schulte-Mecklenbeck M (2019) The effect of information search and attention distribution on the common measure bias in performance evaluations. Working paper. https://ssrn.com/abstract=3240457. Accessed 12 Mar 2020

  • Steiner DD, Rain JS (1989) Immediate and delayed primacy and recency effects in performance evaluation. J Appl Psychol 74:136–142

    Google Scholar 

  • Sutton AW, Baldwin SP, Wood L, Hoffman BJ (2013) A meta-analysis of the relationship between rater liking and performance ratings. Hum Perform 26:409–429

    Google Scholar 

  • Tan HT, Wang EY, Yoo GS (2019) Who likes jargon? The joint effect of jargon type and industry knowledge on investors’ judgments. J Account Econ 67:416–437

    Google Scholar 

  • Tsui AS, Barry B (1986) Interpersonal affect and rating errors. Acad Manag J 29:586–599

    Google Scholar 

  • Varma A, Pichler S (2007) Interpersonal affect: does it really bias performance appraisals? J Lab Res 28:397–412

    Google Scholar 

  • Varma A, DeNisi AS, Peters LH (1996) Interpersonal affect and performance appraisal: a field study. Pers Psychol 49:341–360

    Google Scholar 

  • Voußem L, Kramer S, Schäffer U (2016) Fairness perceptions of annual bonus payments. The effects of subjective performance measures and the achievement of bonus targets. Manag Account Res 30:32–46

    Google Scholar 

  • Woods A (2012) Subjective adjustments to objective performance measures: the influence of prior performance. Account Organ Soc 37:403–425

    Google Scholar 

  • Xu Y, Tuttle BM (2005) The role of social influences in using accounting performance information to evaluate subordinates: a causal attribution appoach. Behav Res Account 17:191–210

    Google Scholar 

Download references

Acknowledgements

The authors greatly appreciate the helpful comments and suggestions from Hans-Ulrich Küpper, Thorsten Knauer, Philipp Schreck, Friedrich Sommer, and Arnt Wöhrmann (editors) as well as two anonymous reviewers. We also thank Markus Arnold, Stephan Kramer, Matthias Sohn as well as participants at the 2019 AAA MAS midyear meeting, the 2018 EAA annual meeting, and the 2018 VHB annual meeting for helpful comments.

Author information

Authors and Affiliations

  1. University of Bern, Engehaldenstr. 4, 3012, Bern, Switzerland

    Kai A. Bauch

  2. Heinrich Heine University Duesseldorf, Universitaetsstr. 1, 40225, Duesseldorf, Germany

    Peter Kotzian & Barbara E. Weißenberger

Authors
  1. Kai A. Bauch
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Peter Kotzian
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Barbara E. Weißenberger
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Kai A. Bauch.

Ethics declarations

Conflict of interest

The authors declare that they have no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Bauch, K.A., Kotzian, P. & Weißenberger, B.E. Likeability in subjective performance evaluations: does it bias managers’ weighting of performance measures?. J Bus Econ 91, 35–59 (2021). https://doi.org/10.1007/s11573-020-00976-0

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11573-020-00976-0

Keywords

JEL Classification

Search

Navigation