Many high-profile business leaders, such as Jack Welch, Marissa Mayer, and Steve Ballmer, have used relative performance feedback to create competition among workers (Cowgill 2015).
For example, Welch, the former CEO of GE, is famous for promoting a culture in which every year the bottom 10% of employees were asked to leave the firm. As a pervasive motivating tool in industry, a rank-order tournament has been shown to make individuals’ mean effort levels converge to their theoretical equilibrium levels (Bull et al. 1987). Carefully chosen feedback information may improve an individual’s overall performance in a competitive environment where relative performance is measured. Although the theoretical work on the impact of various types of feedback information on individual performance is limited (Ederer 2010), there are numerous papers studying related topics in the field or laboratory. Within the education context, Azmat and Iriberri (2010) find that providing students with relative performance feedback information about the class average enhances their grades.
In a field study of furniture salespeople, Barankay (2012) shows that including benchmarks in addition to rank feedback can improve performance significantly over only showing the rank feedback. Berger and Pope (2011) manipulate the competitive feedback information provided to participants in randomized groups such that participants were told they were far behind, slightly behind, tied, or slightly ahead of their opponent, or else given no feedback. They find that being slightly behind increases individuals’ effort. Moreover, Charness et al.
(2011) show that individuals work harder when they receive feedback with winning and losing symbols on their relative position. Indeed, sometimes a small change makes a huge difference. Some researchers compare private and public disclosure of relative performance feedback (e.
g., rank feedback). For example, using a laboratory experiment, Tafkov (2012) shows that participants solve more multiplication problems correctly when relative performance information is provided publicly rather than privately. Using electronic health records from two emergency departments, Song et al. (2017) find that publicly disclosing relative performance feedback information with physicians’ identities -rather than privately disclosing such information without identities – increases physicians’ productivity on average without a significant reduction in service quality.