Alternative Measures of Managers' Performance, Controllability, and the Outcome Effect

This research examines whether alternative performance evaluation measures of managers (return of investment, sales per square foot, customer satisfaction, and employee satisfaction) with varying controllability increases or decreases the extent of the outcome effect and whether asking the evaluator to assess the evaluatee's controllability of these measures prior to the evaluation mitigates the effect. The outcome effect occurs when outcome knowledge systematically influences the evaluator's assessment of the evaluate, irrespective of the quality of his or her initial decision resulting in the outcome. The experimental results reveal that the outcome effect increased as the controllability of the retail store manager's outcome measure increased, with the increase being more for nonfinancial measures than for financial measures. The results also show that controllability assessment of the outcome measures prior to the actual evaluation reduced the outcome effect across all measures.