Motivating Low Performers with Input-based Relative Performance Feedback: Evidence From a Field Experiment
46 Pages Posted: 7 Dec 2021
Date Written: December 6, 2021
Although relative performance feedback can positively influence employee performance, its effect tends to be mixed for employees who underperform compared to their peers. We conducted a field experiment examining whether basing relative performance feedback on inputs, which is relative performance feedback that is strongly linked with effort, helps low-performing employees internalize the bad news that they are underperforming. Internalizing the bad news that they are underperforming helps direct their efforts toward what they can do to change it in the future. Our findings reveal input-based relative performance feedback increases input-based performance among low performers. We also find that input-based relative performance feedback eventually increases low performers’ contributions to the firm’s outputs. These results support our theoretical predictions based on social comparison theory and social loss aversion, and they have implications for firms that face employee turnover restrictions or otherwise seek to motivate low performers in their workforce.
Keywords: Relative performance feedback, field experiment, rankings, status, peer comparison, loss aversion, social comparison, performance information
JEL Classification: C93, D91, M40, M41
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