Why Firms Evaluate Individually their Employees

This article proposes a theory of individual evaluation interviews alternative to ex post performance measures when autonomy diffuses with little wage flexibility. Our agency model with teamwork shows that strong horizontal interdependencies and a supermodular technology do not guarantee coordination towards the Pareto-optimal equilibrium. The cost of monetary incentives increases in such a context and the principal has to rely on a less costly system. Individual evaluation interviews generate an ex ante signal convincing workers that a team spirit exists. The predictions of this model are tested empirically with data from the 1997 French survey on Organizational Change and Computerization. Evaluation interviews appear to be more determined by the collective nature of work than by the degree of autonomy and do not raise monetary rewards but rather a system of beliefs over work