Does Relative Performance Information Lower Group Morale?

Lea Heursen
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Lea Heursen: HU Berlin

No 213, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: In many organizations, productivity relies not just on individual effort but also on group morale, that is, the willingness of co-workers to help each other perform better at work. Relative performance evaluations (RPE) are known to increase individual work morale but may negatively affect group morale because they create a sense of competition among members of a reference group. In a novel experiment, I vary whether or not members of a reference group obtain relative performance information on a task that is relevant for their social image or self-image, a general knowledge test. I measure how this affects the subsequent willingness to help the productivity of others by sharing knowledge with them at a personal cost. I find that RPE cause members of a reference group to compete as intensely as under relative pay, compared to a baseline with no relative performance information and fixed piece-rates. It also increases the perceived social distance between them. Yet, I show that even after a performance competition, individuals are willing to help the productivity of others in the group. These findings advance our understanding of how relative concerns among co-workers affect the way they work together.

Keywords: relative performance information; rank feedback; social incentives; on-the-job help; group productivity; social and self-image; experiment (search for similar items in EconPapers)
JEL-codes: C92 D23 D91 J24 (search for similar items in EconPapers)
Date: 2019-12-12
New Economics Papers: this item is included in nep-exp and nep-hrm
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