Performance feedback and productivity: Evidence from a field experiment Articles uri icon

publication date

  • January 2023

start page

  • 98

end page

  • 115

issue

  • 1

volume

  • 32

International Standard Serial Number (ISSN)

  • 1059-1478

Electronic International Standard Serial Number (EISSN)

  • 1937-5956

abstract

  • We theorize that employees use the performance feedback they receive to reassess their beliefs about the marginal benefit of their effort, which may lead them to increase or reduce their effort. To test our model, we conduct a field experiment at the distribution center of a Fortune 500 firm where employees receive individual performance pay, and we study two types of feedback, individual and relative. The results show that employees react to feedback content in a way that is consistent with the model: They increase their effort if the information provided implies that the marginal benefit of increasing effort is high and decrease it if they learn that it is low. Moreover, performance feedback has a greater impact on the lower quantiles of the distribution of productivity.

subjects

  • Business
  • Economics

keywords

  • distribution center; feedback content; incentive pay; information systems; performance feedback; productivity