Firms often adopt new performance measures to motivate employees to achieve new strategic objectives. We examine how this affects subjective adjustments to performance evaluations. We do so using a naturally occurring experiment in which the Chinese government changed the performance score formula of state-owned enterprises (SOEs) by replacing return on equity (ROE) with economic value added (EVA). Our results suggest that supervisors incorporated EVA into their subjective adjustment decisions by initially anchoring on ROE and subsequently adjusting to account for EVA. Supervisors used this approach in a self-serving fashion as they ignored unfavorable ROE and EVA performance particularly when evaluating socially connected SOEs. The resulting lenient performance evaluations made it more difficult for the Chinese government to motivate SOE managers to improve EVA performance. However, these effects diminished over time as supervisors and their superiors learned through experience how EVA should be incorporated into subjective adjustment decisions.