Whose Opinion Matters? Multi-Rater Information in Potential and Performance Evaluations

With potential evaluations widespread in practice, it is important to understand how these evaluations are formed. Drawing on proprietary data from a large European manufacturing firm, we examine the evaluation-specific informativeness of multi-rater ratings for the supervisor’s subjective evaluation of potential and performance. We predict and find that the supervisor’s own rating is informative for both subsequent potential and performance evaluations. Ratings by other members of the organization are incrementally informative for performance but not potential. For potential, we find that the source of the information matters: information associated with higher-ranked raters is incrementally more informative for potential evaluations than information associated with other sources. Further analyses indicate that the ratings of higher-ranked raters are incrementally informative for performance evaluations, while higher-ranked-rater representation on the rater panel is informative for potential. Our findings suggest that the informativeness of multi-rater information depends jointly on the evaluation objective and the organizational source of that information: performance-relevant information is distributed throughout the organization, whereas evaluating future-job suitability requires consideration of the source of that information. Firms should therefore align rater-panel compositions with the personnel judgment the performance management system is intended to support.

Solo-authored. Current draft available upon request.