Relative performance feedback to teams

Abstract

Work teams often receive feedback on how well their team is performing relative to their benchmarks. In this paper, we investigate experimentally how teams respond to relative performance feedback (RPF). We find that when subjects work under team incentives, then RPF on team performance increases the teams’ average performance by almost 10%. The treatment effect is driven by higher top performance, as this is almost 20% higher when the teams receive RPF compared to when the teams only receive absolute performance feedback (APF). The experiment suggests that top performers are particularly motivated by the combination of team incentives and team RPF. We also find notable gender differences. Females respond negatively to individual RPF, but even more positively than males to team RPF.