Feedback, Self-Esteem and Performance in Organizations
Management Science, 58 (1): 94-113, January 2012
33 Pages Posted: 29 Jan 2009 Last revised: 23 Apr 2014
Date Written: July 9, 2010
We examine whether private feedback about relative performance can mitigate moral hazard in competitive environments by modifying the agents’ self-esteem. In our experimental setting people work harder and expect to rank better when told they may learn their ranking, relative to cases when feedback will not be provided. Individuals who ranked better than expected decrease output but expect a better rank in the future, while those who ranked worse than expected increase output but lower their future rank expectations. Feedback helps create a ratcheting effect in productivity, mainly due to the fight for dominance at the top of the rank hierarchy. Our findings suggest that organizations can improve employee productivity by changing the likelihood of feedback, the reference group used to calculate relative performance, and the informativeness of the feedback message.
Keywords: rankings, feedback, performance management, ego utility, self-esteem
JEL Classification: M12, M52, C91
Suggested Citation: Suggested Citation