The Use of Relative Performance Evaluation at the Business Unit Manager Level

Abstract

Relative Performance Evaluation is a widely studies topic in the theoretical and analytical literature. Also the empirical literature addresses this topic, with its main focus on executive compensation, and using archival data. This study assesses the of RPE in the performance evaluation of business unit managers. Survey data on 325 business unit managers indicate that RPE is used extensively. Also, the findings suggest that RPE improves the quality of the performance evaluation, reducing noise and risk in the performance contacts.