The Provision of Relative Performance Feedback: An Analysis of Performance and Satisfaction

Abstract

This paper studies the effect of providing relative performance feedback on individuals’ performance, under two incentive schemes. In a laboratory setup, agents perform a real‐effort task. We show that relative performance feedback increases performance when performance is related to pay (piece‐rate) but has no effect on performance when pay is independent of performance (flat‐rate). These effects are independent of the agent's relative position. Subjects are also asked to rate their satisfaction during the experiment. We find that under flat‐rate, feedback has no effect on agents’ satisfaction, while under piece‐rate, feedback about relative position affects satisfaction.

The Role of Goals and Feedback in Incentivizing Performance

“…On the other hand, there is a stream of both laboratory and field researches that is more optimistic. In a laboratory experiment, Azmat and Iriberri () find a significant and positive effect of relative performance feedback on performance, independent of the subjects' standings. Hannan et al .…”

Productivity dynamics, performance feedback and group incentives in a sales organization

“…They analyse a setting where agents obtain information either after the game or at an interim stage, and explain how information affects performance, in particular how low productivity workers increase effort early in the game. Azmat and Iriberri (2016) study the effect of providing relative performance feedback under piece-rate versus flat-rate payment. They find that performance feedback matters under a piece-rate scheme, but not when pay is unrelated to performance.…”

Team incentives, task assignment, and performance: A field experiment

“…This anecdotal evidence suggests that, in this retail chain, task allocation matters for team performance, providing a good setting for an experiment on whether team incentives a¤ect task assignment. 4 No such incentive period ran concurrently with our experiment.…”

“…These bonuses are generally earmarked for team outings. 4 The company's management was interested in conducting this …eld experiment as it wished to explore a more extensive use of incentive pay.…”