Managers frequently complain that performance ratings are inflated; thus, this study aims to explore what extent two motivational factors theoretically associated with accountability, rating audience and incentive, can influence rating inflation.
One hundred and forty‐nine raters were assigned to one of four audience conditions (ratee, expert, both ratee and expert – dual, and no audience) and either to an incentive or no incentive condition.
Results showed that when an incentive was offered, raters expecting an expert audience to view their ratings provided significantly lower ratings, and raters expecting a dual audience provided significantly higher ratings compared to raters not offered an incentive. Furthermore, raters expecting a ratee audience inflated their ratings, regardless of incentive.
Financial incentives were used in this study and more research is needed to explore other types of incentives. Nonetheless, this research shows that incentives influence rating level.
The research suggests that if managers wish to reduce rating inflation, they should ensure that an audience, other than the person being rated, will view the ratings.
This study is the first to show that feelings of accountability and rating level are influenced by incentives, and that the audience of the ratings can determine whether incentives result in lower or higher ratings. Furthermore, it appears that the tendency to inflate ratings given a ratee audience may be quite powerful, even in the absence of specific incentives.
