We analyze the role of conflict in principal-agent environments with subjective performance evaluations, reciprocal agents and endogenous feelings of entitlements. By explicitly modeling conflict as the reciprocal reaction of agents that feel unkindly treated, we reveal intriguing welfare effects associated with the agents’ personality and provide a rational for the widespread use of personality tests in recruitment and promotion processes. Finally, we extend our framework to allow principals to choose their evaluation procedure and show, for example, that even if it is costless to choose a high quality evaluation procedure, principals might not find it optimal to do so.