Relative performance information, rank ordering and employee performance: A research note

Experimental Examination of the Relationship between Relative Performance Information, Goal Setting and Performance

“…This will allow all participants to observe both their own performance and the performance of the other four participants. The RPI however, was not displayed based on rank order, as a previous study (Kramer et al, 2016) indicated that whether or not in a rank order, there was no difference in the participants' perception towards the provision of RPI. As in previous RPI-related studies (Hannan et al, 2013;Tafkov, 2013), this study also involves five participants for each session in the RPI present condition.…”

“…Based on these arguments, the first hypothesis in this study is concerned with the effect of RPI on performance. In this case, it is posited that a social comparison element will be manifested by the presence of RPI as it facilitates people to compare their performance with peers in a publicly observed setting (Kramer et al, 2016;Newman & Tafkov, 2014). Furthermore, it is argued that the presence of RPI can result in either positive or negative self-image perceived by individuals.…”

“…From the economic perspective, it is posited by Holmstrom (1982) that the presence of RPI will enable principal to capture agent's unobservable actions by filtering out common uncertainty. Nonetheless, economic perspective underpins that employees exert their effort merely for monetary purposes, such as to obtain compensation or performancerelated bonuses (Kramer et al, 2016;Newman & Tafkov, 2014). Thus, it is argued that if individuals are not rewarded based on their relative performance, then the presence of RPI may not affect one's performance as there is no incentive for an individual to outperform others, under such condition (Tafkov, 2013).…”

“…Therefore, it is predicted that the presence of feedback, which is reflected by the provision of RPI, and the goal setting element as manifested by goal commitment would interact and ultimately affect performance. As the presence of RPI as a relative feedback will provide information about the individual's relative performance in a publiclyobserved setting, this would facilitate self-awareness and self-evaluation for individuals, since the presence of RPI will allow individuals to observe both their relative standing against the assigned goal and their comparable position among peers (Kramer et al, 2016;Tafkov, 2013). Given that the monetary incentive is not provided based on individual's absolute or relative performance, thus the behavioural effect of RPI will be decidedly manifested in such a condition (Hannan et al, 2013).…”

“…This result is consistent with the concept of social comparison theory, which assumes that individuals tend to put more effort to maintain positive self-image in a publicly-observed situation (Tafkov, 2013;Webster, Duvall, Gaines, & Smith, 2003); and goal setting theory, which posits that attainable goal will keep individual's effort at the level that is in line with the goal achievement (Locke, 1996). It is argued that the presence of RPI creates an incentive and motivation for individuals with high goal commitment to outperform others in a publicly-observed setting since the presence of RPI has been shown to motivate individuals to exert more effort (Kramer, Maas, & Rinsum, 2016;McFarland & Miller, 1994), and that a high level of goal commitment itself reflects the individual's unwillingness to neglect the current goal attainment process (Hollenbeck & Klein, 1987).…”