Talent management as a success factor: Career advancements encourage more accurate assessments of employee performance

The success of every company depends on its employees – and they can be responsible for its failure, as well. This is where talent management comes in. A company’s supervisors play a key role in identifying individual employees’ strengths and weaknesses. WU Professor Isabella Grabner from the Institute for Strategy and Managerial Accounting is investigating the mechanisms of employee performance assessments and how supervisors can be motivated to review fairly and accurately. The answer: Through the prospect of career advancement.

Supervisors are in a key position to identify talent in a company’s employees: They are in direct contact with the staff and are responsible for encouraging, motivating, and if necessary, disciplining employees as part of a continuous performance assessment process. From a management perspective, this means they play a very important part in developing talents within the company. However, supervisors can only fulfill this role if they evaluate employees’ performance appropriately. According to researcher Isabella Grabner, however, this can be a problem. “In practice, supervisors often want to avoid conflict and tend to give employees a positive performance assessment, even if their work was poor. This makes it considerably harder for the management to recognize talents and promote deserving employees,” she reports. In her research, Grabner focuses on the role of performance assessments and incentive systems in identifying, developing, and retaining talent in companies. In her current study, she is investigating how incentives can help that supervisors evaluate their team members more accurately.    

Career advancements as a motivational factor

In their study, Isabella Grabner and her colleagues analyzed the evaluation behavior of approximately 1,000 supervisors. In a second step, the consequences of this behavior on how the performance of the supervisors themselves is assessed by company management and on the supervisors’ advancement prospects were determined. The focus was on the question of how differentiated supervisors’ reviews of their staff members were and what consequences this has had for their own careers. “To ensure that the differentiated performance reviews of employees accurately reflected their actual performance, companies use calibration committees. The committees sit down with the supervisors to reflect on the reviews, which allowed them to assess the supervisors’ evaluation behavior,” Grabner explains. “Our results show that those supervisors who conducted the most differentiated performance reviews were rewarded with promotions in recognition of their role in talent management.” 

43% use calibration committees

A further study conducted by Grabner with co-authors in the USA demonstrates how important accurate performance assessments are to companies. A survey done in cooperation with WorldatWork showed that although calibration committees are both time- and cost-intensive, 43% of the US companies surveyed have implemented such committees. The study also confirms the effectiveness of calibration committees in increasing transparency and reducing biases in the performance review process. The survey included a total of 361 members of WorldatWork in management or other senior positions at large North American companies.