Supervisor Impact on Employee Careers: The Role of Rating Differentiation

ABSTRACT Organizations invest heavily in supervision to increase the competitive advantage of their human capital. Although recent studies show that supervisors add value in general, it is not well understood what specific supervisory behaviors are relevant for employee career outcomes. To that end, this study explores the performance evaluation process and focuses on supervisors’ evaluation behavior. Interpreting a supervisor’s tendency to differentiate as a way of advancing employee development, I provide theory-consistent evidence revealing the relevance of differentiation for employee career outcomes. Using proprietary archival data, I demonstrate that differentiation relates positively to employees (1) performing more successfully in a new position upon promotion, (2) receiving a promotion to the next position, and (3) remaining in the organization. Therefore, this study presents novel and relevant evidence on the importance of specific supervisory behaviors in establishing effective human capital management practices.