When Low Evaluations Make People Happier: Implications for Schools, Organizations, and Evaluators

Doctor Antonios (Adoni) Stamatogiannakis
Profesor adjunto de marketing
IE Business School – IE University    

Lower Grades Can Make Students Happier- An Example Taken From IE

All professors are pushed by their students to give higher grades. To handle this pressure, many educational institutions (IE being one of them), use the curve grading system. In curve grading, the performance of all the students in the class is ranked from the highest to the lowest. The real grade is then a function of this ranking. E.g., the top 5% get an A, the following 10% gets an A-, and so on.

Alas, students still want higher grades! And many professors give in by employing more relaxed evaluation criteria. For instance, if the “real” grade is based on the ranking only, a professor could make every student happier by adopting a generous evaluation scheme, giving to every student a few points more. The ranking would be the same, and so would the real grade, but everyone would have a higher “evaluation”, and thus everyone would be happier. Well, they would….NOT.

Recent research we conducted at IE with the doctoral candidate Jonathan Luffarelli and the marketing professor Dilney Goncalves (forthcoming at Human Resource Management) reveals the opposite. In a competitive setting (such as IE), students care relatively more about how others are doing, rather than on how well they themselves are doing. So, if everyone else gets a high grade, any given student would (by comparison) feel less satisfied with his/her grade, even if that is higher too!

Interestingly, neither students themselves, nor professors predict that this would happen, as they overwhelmingly believe that a higher evaluation would result in higher satisfaction. And even more interestingly, when we experimentally made people pay attention to their own performance (instead of to the performance of others), they did exactly as they predicted: They were more satisfied when they received a higher evaluation.

What Are the Implications of these Findings for Industry?

These findings become even more interesting as many companies (e.g., Google, Yahoo, etc.) also evaluate their employees based on relative rankings; employees are not getting extra rewards (bonuses, etc.) based on their performance, but based on how good this performance is in comparison to that of others. Other companies, however, (e.g., Microsoft), are abandoning such relative evaluation systems.

The complex relation between evaluation and satisfaction in relative evaluation systems may be one reason for these inconsistent practices, as they can explain why relative evaluation systems seem to work better in some cases than in others.

Specifically, our findings suggested that when the people being evaluated focus on their own performance, as was expected they are more satisfied as this performance gets better. However, when they compare their performance to that of others, an interesting effect occurs. If everyone’s performance gets higher by a certain amount, the relative evaluation remains unchanged. At the same time, the performance “bar” is raised –as everyone is now doing better. As a result, comparing one’s performance with this new and higher bar reduces satisfaction with one’s performance.

This process suggests that when evaluations in an organization are generous, a relative evaluation system could make employees relatively dissatisfied. When evaluations are strict, though, a relative evaluation system could increase employees’ satisfaction.

Clearly, other things are also important in relative evaluation systems. It is good to see that both academics and managers are trying to figure out the exact determinants of when each evaluation system works best.

And what about the Evaluator?

Although the evaluation criteria in most organizations tend to be well defined, in most cases a certain evaluator (professor or manager) can interpret these criteria with greater or lesser generosity.

As said above, in relative evaluation systems, a strict evaluator would probably make those being evaluated happier with their own performance…but the good news may end here.

As our results also indicate, those being evaluated cannot see how a strict evaluation can make them happier. Thus, they may be happy with their performance; given that everyone is evaluated poorly, they do not do as badly in comparison. But at the same time they may hate the evaluator (professor or manager) for being so strict.

So, what is the short-sighted interest of the evaluator, let’s say an IE professor? Probably, to give good grades to everyone. Students may be less satisfied with their performance, and less motivated. And IE would produce graduates of poorer quality… But the professor would be loved!

To summarize, organizations and employees (or students) frequently neglect that evaluations serve many purposes. One of them (perhaps the most important) is being fair. However, other purposes such as satisfaction, motivation, etc. cannot be overlooked. Sadly, these purposes may sometimes conflict. At those times, the organization should be attentive in order to adopt a solution that will not be detrimental in the longer run.

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