The impact is real.

If your boss thinks you’re awesome, will that make you more awesome?  This question came to us recently, when we were working with the top three levels of management in a multinational.  When asked to rate their direct reports on 360 evaluations, some managers consistently rated everyone higher, and others consistently lower, than the average. We wondered if this was a result of bias, and what effect it had on the people who worked for them.

To understand this better we looked at a larger set of 360 data to identify 50 of the company’s managers who rated their direct reports significantly more positively than everyone else on a five-point scale (that is, they gave a higher percentage of their subordinates top marks than their colleagues did, skewing the curve to the right, as in Lake Woebegone, where everyone is above average). We also identified 31 managers who consistently rated their direct reports significantly lower than their colleagues, skewing their curves to the left.

The difference is stark: Only 18.4% of the people working for the “positive-rating” managers, or the easy graders, were judged as merely “competent” (that is, just average) compared with fully 51.4% of those working for the “negative-rating” managers, clearly the harder graders. While neither group judged even 1% of their workers as truly problematic and in need of significant improvement, almost 14% of those working for the negative-rating managers were judged to need some improvement compared with only 3% of those working for the positive-rating bosses.

It’s hard to parse the meaning of these data. Are the positive-rating managers indulging in grade inflation? Do the lower ratings actually represent a more objective and deserved analysis of a subordinate’s performance? (After all, it does follow the standard bell curve.) Or perhaps the ratings are in some way self-fulfilling, and the leaders who see the best in their people actually make them better, while those who look more critically make their subordinates worse.

We favor that second interpretation, since whether deserved or not, the psychological effect of these ratings was dramatic. Anyone who joined us in the discussions with the subordinates of these two sets of managers would have instantly seen the impact. The people who’d received more positive ratings felt lifted up and supported. And that vote of confidence made them more optimistic about future improvement.  Conversely, subordinates rated by the consistently tougher managers were confused or discouraged—often both. They felt they were not valued or trusted, and that it was impossible to succeed.