The Demotivating Effects of Relative Performance Feedback on Middle-Ranked Workers’ Performance

Abstract

We conduct a series of experiments to study the impact of three different types of relative performance feedback (RPF) on middle-ranked workers’ output on a skill-based task. Few studies investigate the impact of RPF on middle-ranked workers, which is a substantial omission given that they form the majority of the workforce. In our study, participants do not receive any information to help them improve at the task, and there are no financial incentives. We find that receiving any type of feedback reduces performance compared to no feedback. We conduct mediation analysis and show that receiving feedback changes employees’ feelings associated with general performance, which explains the performance reduction. Aligned with theory, delivering feedback increases the focal employee’s social comparison involvement (SCI), which measures the focal individual’s tendency to compare themselves to others while performing the task and also their shame. Our results imply that making individuals care more about social comparisons and creating feelings of shame decreases performance on skill-based tasks for middle-ranked workers in the absence of financial incentives and information on how to improve. An implication of our study is that any form of rank-based performance feedback should be implemented with caution as it may harm the performance of the majority of workers.

Keywords: Worker performance, relative performance feedback, online experiments, behavioral operations, rank feedback