Workplace evaluation is harder, more human, and less transparent than most employees expect

A young employee recently asked me why people with less merit and fewer qualifications seemed to be moving ahead of him. In his case, the immediate issue was promotion, but the same question applies to performance reviews, merit increases, bonus decisions, stretch assignments, and leadership opportunities.

The employee’s logic was straightforward: if one person works harder, produces more, and has stronger qualifications, why would someone else be evaluated more favorably? The difficulty is that workplace evaluation is rarely based only on effort and output. Managers are also weighing risk, trust, future capacity, business context, visibility, and the cost of being wrong.

That makes evaluation more imprecise than most organizations like to admit. Every decision is not necessarily unfair. Rather, what appears to be a clean comparison between people is usually a human judgment made with incomplete information.

Research on merit at work supports this more complex framework. Castilla and Ranganathan found that managers do not approach merit as neutral observers. Their own histories of being evaluated shape how they later evaluate others. Some managers use a focused approach, emphasizing measurable work actions at the individual level. Others use a more diffuse approach, considering both work actions and personal qualities across individual and team contexts. The same employee performance can therefore be evaluated differently depending on who is making the judgment. This helps explain why employees and managers often talk past each other.

The problem becomes sharper when evaluation moves from past performance to future opportunity. Performance looks backward. It asks what the employee has done, how well the work was completed, and whether goals were met. Promotion, expanded scope, and high visibility assignments look forward. They require an additional judgment about what the employee is likely to do next. That judgment carries more ambiguity.

Benson, Li, and Shue’s 2026 American Economic Review study on potential and the gender promotion gap shows how fraught this can become. Using data on 29,809 management-track employees at a large retail chain, they found that women received lower potential ratings despite receiving higher performance ratings.

Organizations do need to evaluate future capacity. They cannot make every decision by looking only at past output, especially when the next role requires more ambiguity, influence, risk, or leadership. At the same time, potential is a vulnerable category. It can become a proxy for confidence, comfort, style, stereotype, similarity, or a manager’s unspoken picture of what leadership looks like.

Performance reviews carry similar risks. Bohnet, Hauser, and Kristal examined gender and race dynamics in performance appraisals at a multinational company and found that ratings were shaped by both demographic dynamics and appraisal design. Their research also found that when managers had access to employees’ self-evaluations, those self-ratings influenced manager ratings. Prior year ratings also affected later assessments. Evaluation systems often carry forward earlier judgments, even when those judgments may have been incomplete.

These flaws are especially important for young employees to understand. Work does not enter the review process as pure fact. It is filtered through what was noticed, what was documented, what the manager remembers, what peers or stakeholders said, what the employee claimed, what the prior rating suggested, and what the organization currently needs. By the time a rating or opportunity decision is made, the work has been interpreted many times over. Without transparency, the employee cannot tell the difference between a thoughtful assessment and an unfair one.

The result of an evaluation matters, but the process used to reach that result also shapes whether employees continue to trust the organization. Ahmed, Anderson, and Costa studied employees applying for promotion and found that perceptions of procedural integrity predicted organizational trust and turnover intentions.

Ambiguity is how many workplaces create unnecessary damage with their employees, especially those new to work. Organizations often use words like merit, readiness, potential, leadership, and fit without defining them with enough precision. Managers may believe they are applying sound judgment, while employees experience the process as vague, political, or biased. Employees may believe they are clearly outperforming peers, while managers may be evaluating criteria the employee has never been told to demonstrate.

The first step is understanding the imprecision of the process. Evaluation at work is built from evidence, memory, judgment, comparison, organizational priorities, and human interpretation. It can be made more disciplined, but it will never be perfectly mechanical. Managers need to be more explicit about what they are evaluating, what evidence they are using, and how current performance connects to future opportunity. Employees need to understand that effort and output are essential, but they may not be the entire basis on which workplace judgments are made.

The practical learning is not to become cynical about evaluation. It is to become more literate in how evaluation works. Merit is partly constructed. Potential is partly predictive. Fairness depends heavily on process. Once employees understand that, they can ask better questions and provide better evidence. Once managers understand that, they should become more careful about defining criteria, explaining decisions, and reducing the guesswork that causes employees to lose trust.

References

Ahmed, S. M., Anderson, N., & Costa, A. C. (2023). Employee fairness reactions to promotional procedures: A longitudinal study. Academy of Management Proceedings, 2023(1). https://doi.org/10.5465/AMPROC.2023.19405abstract

Benson, A., Li, D., & Shue, K. (2026). “Potential” and the gender promotion gap. American Economic Review, 116(2), 375-417. https://doi.org/10.1257/aer.20220831

Bohnet, I., Hauser, O. P., & Kristal, A. S. (2025). Can gender and race dynamics in performance appraisals be disrupted? The case of social influence. Journal of Economic Behavior & Organization, 235, 107032.

Castilla, E. J., & Ranganathan, A. (2020). The production of merit: How managers understand and apply merit in the workplace. Organization Science, 31(4), 909-935. https://doi.org/10.1287/orsc.2019.1335