Recognizing the Best: The Productive and Counterproductive Effects of Relative Performance Recognition

Abstract

I use a laboratory experiment to examine the productive and counterproductive effects of providing employees nonpecuniary recognition based on measures of relative performance. I find that, on average, recognition programs increase both productive efforts (those intended to increase one's own performance) and counterproductive efforts (those intended to decrease peer performance) in a setting where it is salient to employees that they can exert both productive and counterproductive efforts. Interestingly, I also find that these effects are moderated by the Dark Triad of personalities, a group of three personality traits. My study reveals that recognition programs mainly lead individuals who score lower on the Dark Triad to increase counterproductive efforts and those who score higher on the Dark Triad to increase productive efforts. These results contribute to the literature on relative performance information by demonstrating that recognition programs can have both productive and counterproductive effects. However, whether these programs produce mainly a productive or counterproductive effect depends on important personality characteristics of the employees. * Accepted by Khim Kelly. This paper is based on my dissertation. I gratefully acknowledge the encouragement and guidance from my committee members, a accroître leurs efforts contre-productifs et les personnes dont la note est plus elev ee a cette même evaluation a accroître leurs efforts productifs. Ces r esultats enrichissent les ecrits sur l'information touchant la performance relative en d emontrant que les programmes de reconnaissance peuvent avoir a la fois des effets productifs et contre-productifs. La nature productive ou contre-productive des efforts qu'engendrent principalement ces programmes d epend toutefois des caract eristiques importantes de la personnalit e des employ es.Recognizing the Best 967

Relative Target Setting and Cooperation

“…There are some experimental studies suggesting that RPE encourages sabotage or collusion(Bandiera, Barankay, and Rasul [2005],Charness and Villeval [2009],Harbring and Irlenbusch [2011],Wang [2017]). There is also some evidence that executive compensation is less sensitive to peer performance when firms prefer to soften product market competition(Aggarwal and Samwick [1999],Vrettos [2013]).…”

Psychology in management accounting and control research: an overview of the recent literature

“…For instance, both subtopics subjectivity in performance evaluations and PMS design are strongly influenced by cognitive theories (e.g., Dai et al 2018;Fehrenbacher et al 2018;Bedford et al 2019). Psychology-based research on the provision of RPI instead illuminates social aspects using social comparison Psychology in management accounting and control research:… theory (e.g., Hartmann and Schreck 2018) or incorporates negative personality aspects, such as the Dark Triad or negativity bias (e.g., Wang 2017;Kaplan et al 2018a). Other effects of evaluation processes and outcomes are addressed by considering personality traits, such as tolerance for ambiguity or psychological entitlement (e.g., Holderness et al 2017), and social phenomena, such as affective reactions (e.g., Ding and Beaulieu 2011).…”

“…From 2015 to the first half of 2019, we identify articles employing concepts from social, cognitive, and motivation psychology and multiple subfields simultaneously. Furthermore, five out of the seven articles employing personality psychology were published in 2017 and 2019 (Fehrenbacher et al 2017;Holderness et al 2017;Wang 2017; Davidson 2019; Nichol 2019). Moreover, three articles that rely on a combination of personality psychology and other subfields were published in 2017, 2018, and 2019 (Reichert and Woods 2017;Kaplan et al 2018a;Chong and Wang 2019).…”

“…When not drawing upon social comparison theory, researchers incorporate aspects of personality into their research, such as the three personality traits of Machiavellianism, narcissism, and psychopathy, which are also referred to as the Dark Triad of personality traits (Paulhus and Williams 2002;Wang 2017). All three are rather negative character traits that are associated with strategic manipulation, a sense of superiority, high impulsiveness, or low empathy (Wang 2017). In the context of recognition programs, Wang's (2017) laboratory experiment examines the Dark Triad of personality traits and suggests that the provision of RPI can have productive or counterproductive effects depending on an individual's score on those traits.…”

Managing Earnings to Appear Truthful: The Effect of Public Scrutiny on Exactly Meeting a Threshold

“…Finally, our study complements related literature on the implications of managers' personality in financial reporting. A growing body of literature is concerned with the DT personality of managers, employees and auditors (Hobson et al 2019;Majors 2016;Wang 2017).…”