Multitasking Incentives and Biases in Subjective Performance Evaluation

Subjective performance evaluation serves as a double-edged sword. While it can mitigate multitasking agency problems, it also opens the door to evaluators’ biases, resulting in lower job satisfaction and a higher rate of worker quits. Using the personnel and transaction records of individual sales representatives in a major car sales company in Japan, we provide direct evidence for both sides of subjective performance evaluation: (1) the sensitivity of evaluations to sales performance declines with the marginal productivity of hard-to-measure tasks, and (2) measures of potential evaluation bias we construct are positively associated with the incidence of worker quits, after correcting for possible endogeneity biases.