CATEGORICALLY GOOD: CAN THE BALANCED SCORECARD IMPROVE STEREOTYPE-BASED PERFORMANCE APPRAISAL?

Leonard Branson Nathan L. Steele Chung-Hsien Sung

University of Illinois Springfield

ABSTRACT

An organization’s ability to accurately identify and reward managers moving it toward its strategic objectives is crucial. The accuracy of employee performance evaluation systems continues to be problematic. Stereotyping has proven to be a very robust negative phenomenon that both researchers and practitioners strive to control. Financial performance has been the gold standard in determining if organizations and their managers were performing well. The introduction of the Balanced Scorecard changed the framework from looking primarily at financial performance, to looking at a balanced set of financial and non-financial performance indicators.

This study reports an empirical study examining the impact of stereotyping on the performance ratings of managers in either the context of only financial performance measurers, or the context of using Balanced Scorecard performance measures. The results of this study indicate that stereotyping has an impact on evaluations in both contexts, but the use of the Balanced Scorecard significantly reduces the impact of stereotype information on managerial performance evaluations below levels observed when solely utilizing financial performance data.