How calibration committees can mitigate performance evaluation bias: An analysis of implicit incentives

While prior research on performance evaluation bias has mainly focused on the
determinants and consequences of rating errors, we investigate how a firm can provide implicit
incentives to supervisors to mitigate these errors via its calibration committee. We empirically
examine the extent to which a calibration committee incorporates supervisors' evaluation behavior
with respect to their subordinates in the performance evaluation outcomes, i.e., performance ratings
and promotion decisions, for these supervisors. In our study, we distinguish between lack of skills
and opportunism as two important facets of evaluation behavior, which we expect the calibration
committee to address differently. Using panel data of a professional service firm, we show that
supervisors' opportunistic behavior to strategically inflate subordinates' performance ratings is
disciplined through a decrease in the supervisors' own performance rating, while the supervisors'
skills to provide less compressed and thus more informative performance ratings is rewarded
through a higher likelihood of promotion.