Supervisor Accuracy in Subjective Evaluations and Employee Careers

Abstract

We investigate how the accuracy of supervisors’ performance evaluations affects employee career outcomes. We develop a simple model in which a supervisor receives a noisy signal of an employee’s performance and submits a subjective rating based on that signal. The model predicts that more accurate supervisors produce greater dispersion in their rating scores across subordinates and induce more promotions. Using personnel records from a large manufacturing firm, we identify supervisors with higher rating dispersion as accurate raters and estimate the effects of being assigned to such supervisors. We find that employees assigned to accurate raters are promoted at higher rates. We also show that supervisors who drink alcohol and those hired more recently tend to be more accurate raters.