Halo Effect in Subjective Performance Evaluation Bias

Authors

  • Andi Ina Yustina Universitas Presiden
  • Gudono Gudono Universitas Gajah Mada

DOI:

https://doi.org/10.14414/jebav.v19i3.621

Keywords:

Halo Effect - Subjective Performance Evaluation

Abstract

This study aimed not only to examine the effect of the objective measure and controllability on subjective performance evaluation but also to prove empirically the halo effect phenomenon which is present in the evaluation process when evaluators are faced with two or more different measurement dimensions. This study used a 2x2 factorial web-based experiment involving 62 undergraduate students and 77 sales managers in the Telecommunications industry. The results reveal the subjective performance evaluation manager is directly influenced by objective measurement based on sales performance. Subjective evaluation of performance evaluator will be high when the objective performance information managers showed a high score and vice versa. The level of controllability affects undergraduate students in conducting subjective performance rating. This evidence suggests that the two subjects of this research using their discretion in conducting the performance appraisal rating. Halo effect is proven to have high correlation with two different dimensions of performance measurement.

References

Baker, G., Gibbons, R., & Murphy, K. J., 1994, ‘Subjective Perormance Measures in Optimal Incentive Contracts’, The Quarterly Journal of Economics, 109(4), 1125-1156.

Bechger, T. M., Maris, G., & Hsiao, Y. P., 2010, ‘Detecting Halo Effect in Performance-Based Examinations’, Applied Psychological Measurement, 34(8), 607-619.

Belzer, W. K. & Sulsky, L. M., 1992, ‘Halo and Performance Appraisal Research: A Critical Examination’, Journal of Applied Psychology, 77(6), 975-985.

Bellavance F., Landry, S., & Schiehll, E, 2013, ‘Procedural Justice in Managerial Performance Evaluation: Effect of Subjectivity, Relationship Quality, and Voice Opportunity’, The British Accounting Review, 45, 149-166.

Bernardin, H. J., and Beatty, R. W., 1984, Performance Appraisal: Assesing Human Behavior at Work, Boston, Kent.

Bol, J. C., 2008, ’Subjectivity in Compensation Contracting’, Journal of Accounting Literature, 27, 1-23.

Bol, J. C., 2011, ‘The Determinant and Performance Effects of Managers' Performance Evaluation Biases’, The Accounting Review, 86(5), 1549-1575.

Bol, J. C., & Smith, S. D., 2011, ‘Spillover Effect in Subjective Performance Evaluation: Bias and the Asymmetric Influence of Controllability’, The Accounting Review, 86(4), 1213-1230.

Bommer, H. W., Johnson, J. L., Rich, G. A., Podsakoff, P. M. & Mackenzie, S. B., 1995, ‘On the Interchangeability of Objective and Subjective Measure of Employee Performance: A Meta-Analysis’, Personnel Psyhcology, 48, 587-605.

Bond, S. D., Carlson, K. A., Meloy, M. G., Russo, J. E., & Tanner, R. J, 2007, ‘Information Distortion in the Evaluation of a Singgle Option’, Organizational Behaviour and Human Decision Processes, 102, 240-254.

Bowditch, J. L., & Buono, A. F., 2001, A Primer on Organizational Behavior. Fifth Edition, John Wiley & Sons, New York.

Breuer, K., Nieken, P., & Sliwka, D., 2013, ‘Social Ties and Subjective Performance Evaluation: An Empirical Investigation’, Review Management Science, 7, 141-157.

Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, C. O. L. H., & Yee Ng, K., 2001, ‘Justice at the Millineum: A Meta-Analytic Review of 25 Years of Organizational Justice Resarch’, Journal of Applied Psychology, 86(3), 425-445.

Cooper, W. H., 1981, ‘Ubiquitous Halo’, Psychological Bulletin, 90, 218-244.

Cropanzano, R., & Konovsky, M. A., 1995, ‘Resolving the Justice Dilemma by Improving the Outcome: The Case of Employee Drug Screening’, Journal of Business and Psychology, 10(2), 221-243.

Friedson, E., & Rhea, B., 1965, ‘Knowledge and Judgment in Professional Evaluations’, Administrative Science Quarterly, 10(1), 107-124.

Gibbs, M., Merchant, K. A., Van der Stede, W. A., & Vargus, M . E., 2004, ‘Determinants and Effect of Subjectivity in Incentives,’ The Accounting Review, 79(2), 409-436.

Goldman, J., & Bathia, S., 2012, ‘Performance Evaluation Inflation and Compression’, Accounting, Organizations and Society, 37, 534-543.

Grcic, J., 2008, ‘The Halo Effect Fallacy’, Electronic Journal of Philosophy, 1-58.

Greenberg, J., 1987, ‘Reaction to Procedural Justice in Payment Distribution: Do the Means Justify the Ends?’, Journal Of Applied Psychology, 72(1), 55-71.

Holmstrom, B., 1979, ‘Moral Hazard and Observability’, The Bell Journal of Economics, 10(1), 74-91.

Ittner, C. D., Larcker, D. F., & Meyer, M. W., 2003, ‘Subjectivity and the Weighting of Performance Measures: Evidence from a Balanced Scorecard’, The Accounting Review, 78(3), 725-758.

Jacobs, R., & Kozlowski, S. W., 1985, ‘A Closer Look at Halo Error in Performance Ratings’, The Academy of Management Journal, 28(1), 201-212.

Kozlowsky, S. W. J., & Kirsch, M. P., 1987, ‘The Systematic Distortions Hypothesis, Halo, and Accuracy: An Individual-Level Analysis’, Journal of Applied Psychology, 72(2), 252-261.

Kren L., & Tyson, T., 2009, ‘Trade-off in Objective and Subjective Performance Evaluation: A Case Study Examining the Validity of Agency Theory Predictions’, Management Accounting Quarterly, 10(2), 12-23.

Maas, V. S., & Torres-Gonzalez, R., 2011, ‘Subjective Performance Evaluation and Gender Discrimination’, Journal of Business Ethics, 101, 667-681.

Moers, F., 2005, ‘Discretion and Bias in Performance Evaluation: The Impact of Diversity and Subjectivity’, Accounting, Organization and Society, 30, 67-80.

Murphy, K. R., & Jako, R. A., 1989, ‘Under What Condition are Observed Intercorrelations Greater than or Smaller than True Intercorrelations?’, Journal of Applied Psychology, 74, 827-830.

Murphy, K. R., Jako, R. A., & Anhalt, R. L., 1993, ‘Nature and Consequences of Halo Error: A Critical Analysis’, Journal of Applied Psychology, 78(2), 218-225.

Nahartyo, E., 2012, Desain dan Implementasi Riset Eksperimen, UPP STIM YKPN, Yogyakarta.

Nisbett, R. E., & Wilson, T. D., 1977, ‘The Halo Effect: Evidence fo Unconscious Alteration of Judgments’, Journal of Personality and Social Psychology, 35(4), 250-256.

Prendergast, C., 1999, ‘The Provision of Incentives in Firm’, Journal of Economic Literature, 37(1), 7-63.

Prendergast, C., & Topel, R. H., 1996, ‘Favoritism in Organization’, Journal of Political Economy, 104(5), 958-978.

Tan, H. T., & Lipe, M. G., 1997, ‘Outcome Effect: The Impact of Decision Process and Outcome Controllability’, Journal of Behavioral Decision Making, 10, 315-325.

Tetlock, P. E., 1983, ‘Accountability and the Perseverence of First Impressions’, Social Psychology Quarterly, 46(4), 285-292.

Thorndike, E. L., 1920, ‘A Constant Error in Psychological Rating’, Journal of Applied Psychological, 82(5), 665-674.

Utami, I., Kusuma, I. W., Gudono, & Supriyadi., 2014, ‘Halo Effect in Analytical Procedure: The Impact of Client Profile and Information Scope’, Global Journal of Business Research, 8(1), 9-26.

www.esurv.org

Downloads

Published

2017-03-10

How to Cite

Yustina, A. I., & Gudono, G. (2017). Halo Effect in Subjective Performance Evaluation Bias. Journal of Economics, Business, and Accountancy Ventura, 19(3), 393–404. https://doi.org/10.14414/jebav.v19i3.621