Relative Performance Information, Rank Ordering and Employee Performance: A Research Note

32 Pages Posted: 8 Sep 2015 Last revised: 22 Mar 2016

See all articles by Stephan Kramer

Stephan Kramer

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Victor S. Maas

University of Amsterdam - Amsterdam Business School

Marcel Van Rinsum

RSM Erasmus University

Date Written: March 18, 2016

Abstract

We conduct a laboratory experiment to examine whether the provision of detailed relative performance information (i.e., information about the specific performance levels of peers) affects employee performance. We also investigate how – if at all – explicit ranking of performance levels affects how employees respond to relative performance information. Our hypotheses are developed based on insights about social comparisons and status incentives from the psychology and behavioral economics literature. The results of the experiment show that the provision of relative performance information increases employee performance, yet we find no additional effects of rank ordering. Specifically, average performance levels are similar in conditions in which relative performance figures are presented in random order, in best-to-worst order and in worst-to-best order.

Keywords: Experiment, Performance, Ranking, Relative performance information, Social comparison, Status incentives.

JEL Classification: M41, M50

Suggested Citation

Kramer, Stephan and Maas, Victor S. and Van Rinsum, Marcel, Relative Performance Information, Rank Ordering and Employee Performance: A Research Note (March 18, 2016). Management Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2656987 or http://dx.doi.org/10.2139/ssrn.2656987

Stephan Kramer (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

HOME PAGE: http://www.stephankramer.com

Victor S. Maas

University of Amsterdam - Amsterdam Business School ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Marcel Van Rinsum

RSM Erasmus University ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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