The Evaluation of Human Resource Management Practices - Empirical Studies on Subjective Performance Evaluation, Target Agreements, and Intra-Firm Trainings

As human capital is a major source of economic growth in today's organizations, there is a need for well-functioning human resource practices that are designed to guide and direct the effort of employees. This thesis investigates three relevant human resource practices: subjective performance evaluations, target agreements and intra-firm trainings. Four empirical papers are presented that reveal insights about biases in performance evaluations, gender differences in manager's evaluation behavior, the determinants and effects of using target agreements and the effects of intra-firm trainings. Chapter 2 examines the often claimed conjecture that subjective performance evaluations are biased due to personal preferences of supervisors towards their subordinates. It is hence empirically analyzed whether the social proximity in a supervisor-subordinate relationship implies lenient evaluations when holding the performance of individuals constant. Based on personnel records of a call-center it is shown, while controlling for objective performance measures and using fixed effects regressions, that employees in smaller teams receive more lenient evaluations compared to employees working in larger teams. Also, a repeated appraisal by the same supervisor implies a more positive evaluation as compared to evaluations in first-time supervisor-subordinate relations. The third chapter analyzes whether female and male managers show different behavior when evaluating their subordinates. In detail, the gender difference in differentiating between employees is investigated. Higher differentiation in evaluations increases the marginal return for effort and should hence improve the incentive setting for employees. While conducting fixed effects regressions and eliminating unobserved heterogeneity between work units it is revealed that units that are supervised by female managers receive more differentiated grades than units with male supervisors. Also, female managers seem to do well in the tough part of differentiation, namely in assigning poor grades to employees. In chapter 4, an empirical analysis on the determinants and the effects of using target agreements on firm's performance is presented. Based on a large-scale survey data set of firms (IAB Panel) for the years 2005 and 2007, the company and workforce characteristics that may determine the use of target agreements in firms are analyzed. Moreover, it is shown that the introduction of target agreements seems to positively affect firm's performance. In the last chapter, the effects of employees' training participation on their absence behavior and turnover probability are being studied. Human capital theory suggests that receiving training in general skills increases their market value for other firms and should imply an increased turnover probability if wages are not adequately matched. Furthermore, accumulating human capital through training increases the employees' opportunity cost of working. Absenteeism should hence decrease persistently. Based on personnel records of a multinational firm we find that, in contrast to human capital predictions, general training leads to a decreased turnover probability. Loyalty is hence even reduced as general training may be perceived as a signal of trust in the employee. Furthermore, only a short term decrease in absenteeism is found for trained employees suggesting that employees might temporarily reciprocate to firm-sponsored trainings.