The Impact of Subjectivity in Performance Evaluation Practices on Public Sector Managers' Motivation

Abstract

This study investigates the effect of subjectivity in performance evaluation practices on managerial motivation in public sector organizations. Subjectivity in performance evaluation practices can increase motivation if supervisors are able to provide better informational feedback (relative to objective performance evaluation practices) to employees on tasks which are difficult to measure. However, subjectivity is likely to reduce motivation if it reduces mission clarity or negatively affects relations between supervisor and subordinates (for example, through a decrease in trust). Our analysis is based on the responses from a survey amongst 94 public sector managers in The Netherlands. We predict and find that subjectivity in performance evaluation practices reduces mission clarity, which in turn decreases motivation. We also confirm our hypothesis that subjectivity negatively affects subordinate managers' trust in their supervisor, which also reduces motivation. Jointly, these results indicate that the negative effects of subjectivity in performance evaluation practices outweigh its potential positive consequences, suggesting that New Public Management’s focus on more objective performance measures can indeed be beneficial to public sector organizations. By itself, however, this does not automatically imply that more objective systems in general are optimal in all public sector organizations.

Keywords: public sector, mission clarity, trust, motivation, performance evaluation

JEL Classification: M40