The Effect of Relative Performance Information on Effort Allocation and Performance in a Multi-Task Environment

Hannan, R. Lynn; McPhee, Gregory P.; Newman, Andrew H.; Tafkov, Ivo

doi:10.2139/ssrn.1660184

Cited by 25 publications

(40 citation statements)

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“…The specific feedback characteristics that researchers have looked at include, for example, the credibility and power of the source (Ilgen, Fisher, and Taylor []), whether the feedback is on individual or relative performance (Hannan, Krishnan, and Newman []), whether it is communicated privately to the recipient or made public (Hannan et al. [], Tafkov []), and whether it conveys a positive or negative message (Ilies and Judge []). Two characteristics that have received special attention, and are particularly interesting for uncovering the effect of salience, are the detail and frequency of feedback.…”

Section: Review Of Feedback Researchmentioning

confidence: 99%

The Performance Effect of Feedback Frequency and Detail: Evidence from a Field Experiment in Customer Satisfaction

Casas‐Arce

Lourenço

Martínez-Jerez

2017

J of Accounting Research

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This paper presents the results from a field experiment that examines the effects of nonfinancial performance feedback on the behavior of professionals working for an insurance repair company. We vary the frequency (weekly and monthly) and the level of detail of the feedback that the 800 professionals receive. Contrary to what we would expect if these professionals conformed to the model of the Bayesian decision maker, more (and more frequent) information does not always help improve performance. In fact, we find that professionals achieve the best outcomes when they receive detailed but infrequent (monthly) feedback. The treatment groups with frequent feedback, regardless of how detailed it is, perform no better than the control group (with monthly and aggregate information). The results are consistent with the information in the latest feedback report being most salient and professionals in the weekly treatments overweighting their most recent performance, hampering their ability to learn.

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Section: Review Of Feedback Researchmentioning

confidence: 99%

The Performance Effect of Feedback Frequency and Detail: Evidence from a Field Experiment in Customer Satisfaction

Casas‐Arce

Lourenço

Martínez-Jerez

2017

J of Accounting Research

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“…Recent research documents that although providing public RPI in a multitask environment can be effective at increasing employees' effort level , it may also cause employees to distort their effort allocation such that it is detrimental to overall firm performance (Hannan et al ). Our study provides insight into the robustness of Hannan et al's () findings regarding RPI‐driven effort distortion and informs firms on how to design RPI to enhance its usefulness in directing employees' effort. Specifically, this study investigates how the informativeness of RPI affects employees' effort allocation and performance in a multitask environment.…”

Section: Introductionmentioning

confidence: 99%

“…Regarding RPI detail level, less detailed RPI might reveal the ranking of each employee's performance (Berger et al ; Brown et al ; Hannan et al ; Knauer et al ; Newman and Tafkov ), while more detailed RPI provides the actual performance scores for each employee (Kramer et al ; Murthy and Schafer ). The latter allows employees to discern both the relative performance rankings and the magnitude of the underlying performance differences.…”

Section: Introductionmentioning

confidence: 99%

“…Regarding the level of temporal aggregation of RPI, less temporally aggregated RPI might reveal only how the employees' current‐period performance compares to that of the other employees (Berger et al ; Choi et al ), while more temporally aggregated RPI reveals how the employees' performance, generated across multiple periods, compares to that of the other employees (Hannan et al ; Newman and Tafkov ). As explained in more detail later, more temporally aggregated RPI is more informative because it allows employees to better infer the stability underlying any performance differential.…”

Section: Introductionmentioning

confidence: 99%

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The Informativeness of Relative Performance Information and Its Effect on Effort Allocation in a Multitask Environment

Hannan

McPhee

Newman

et al. 2019

Contemporary Accting Res

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Prior research documents that providing relative performance information (RPI) motivates employees to increase effort; however, a potential downside of RPI is that it also motivates employees to distort their effort allocations between tasks such that it can be detrimental to overall firm performance. This study investigates via an experiment how the informativeness of RPI affects employees' effort allocations and performance in a multitask environment. We investigate the informativeness of two RPI design choices that are observed in practice: detail level and temporal aggregation. Regarding detail level, firms may provide each employee's performance ranking on tasks, which is less informative than providing the actual performance score of each employee. Regarding temporal aggregation, firms may provide RPI that is reset each period, which is less informative than RPI that is based on cumulative performance. We find RPI detail level and temporal aggregation interact to influence effort distortion. Specifically, we find that, compared to reset RPI, cumulative RPI leads to greater distortion of effort away from firm‐preferred allocations and that this effect is magnified when RPI provides actual performance scores rather than performance rankings. Finally, high levels of effort distortion hurt overall performance, thereby demonstrating the potentially detrimental effect of effort distortion on performance. Results of our study enhance our understanding of how firms can use their control over the design of RPI to enhance its usefulness in directing employees' effort in multitask environments by highlighting the role that informativeness of information can have on employee behavior.

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“…7 Tafkov (2013) and Brown et al (2014) present social comparison as part of an organizational control-system toolkit that can be used to influence employee behavior in desired ways. Hannan, McPhree, Newman, and Tafkov (2013) provide a useful reminder that individuals will also choose their own social comparisons and that these will not necessarily foster the smooth functioning of organizational control systems. In this experiment, participants allocate effort between two tasks; they are likely to be better at one than the other, due to basic ability and interest differences.…”

Section: Social Comparison As a Source Of Motivationmentioning

confidence: 99%

Management accounting in the laboratory and in social context: Four contrasts, 1975–2014

Luft

2016

Accounting, Organizations and Society

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The Effect of Relative Performance Information on Effort Allocation and Performance in a Multi-Task Environment

Cited by 25 publications

References 0 publications

The Performance Effect of Feedback Frequency and Detail: Evidence from a Field Experiment in Customer Satisfaction

The Performance Effect of Feedback Frequency and Detail: Evidence from a Field Experiment in Customer Satisfaction

The Informativeness of Relative Performance Information and Its Effect on Effort Allocation in a Multitask Environment

Management accounting in the laboratory and in social context: Four contrasts, 1975–2014

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