Motivating Low Performers with Input-based Relative Performance Feedback : Evidence From a Field Experiment

Although relative performance feedback can positively influence employee performance, its effect tends to be mixed for employees who underperform compared to their peers. We conducted a field experiment testing whether basing relative performance feedback on inputs, which is relative performance feedback that is strongly linked to effort, motivates underperforming employees to increase performance. Inputs should help them internalize the bad news that they are underperforming, which, in turn, should direct their future efforts toward what they can do to change it. Our findings reveal input-based relative performance feedback increases input-based performance among low performers. We also find it eventually increases low performers' contributions to the firm's outputs. These results support our theoretical predictions based on social comparison theory and social loss aversion, and they have implications for firms that face employee turnover restrictions or otherwise seek to motivate low performers in their workforce