CORNELL UNIVERSITY MEDIA RELATIONS OFFICEMarch. 24, 2016Best, worst employees work harder when ranked

Newswise — People love being in first place and loath being last. New findings by researchers including Assistant Professor Victoria Prowse, a labor and experimental economist at Cornell University’s ILR School, say that rank determines employees’ effort; workers at the far ends of the performance bell curve try harder; workers in the middle put in less effort.

Click here for Prowse’s bio

Prowse says: “Our research finds the specific rung that someone is on in the ranking ladder determines how much effort they put in afterwards. In particular, our findings suggest that ranking is particularly effective in incentivizing individuals who put in very good or very poor performances at work. We also show that the effects of ranking on employee performance are huge, highlighting just how important it is to get it right as there are also economic implications for the revenue and profits for the firms involved.

“The pattern of response that we find has implications for organizational design. Employers wanting to reap the full benefit of rank-based performance feedback might consider creating small comparison groups – statistically reducing the number of workers in the middle of the pack – by adopting decentralized organizational structures or by designing jobs that are highly specialized, so that there are fewer workers in the comparison groups.

“Our findings also raise questions about desirability of putting income tax records in the public domain, because this provides people with very detailed information about how they stack up against their neighbors, friends and co-workers.”

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