Multi-Level Relative Performance Evaluations in Teams

• In Event: 4.03 Teamwork and Collaboration

Abstract

Teamwork is key to many firms’ productivity. However, the incentives used by firms to motivate effort from employees in practice often also induce helping and/or hurting behaviors that affect the efficacy of interactive groups (i.e., “teams”). Given the complex and interdependent nature of teams, relative performance evaluations (RPE) are common in contracts. We experimentally examine the effects of within-group, between-group, and simultaneous within- and between-group RPE on team members’ efforts and actions to help or hurt other teammates. Our results suggest that within-group RPE increase effort, but also increase undesirable hurting behavior while between-group RPE increase effort and desirable helping behavior. Further, adding within-group RPE to between-group RPE increases effort and decreases helping. However, this combination yields the greatest team output by reducing strategic uncertainty about the behavior of other team members. We contribute to the literature by examining how the combination of both within- and between-group RPE affects helping and hurting behaviors in teams.

Authors

• Jeremy Douthit, University of Arizona

• Max Hewitt, University of Arizona-Tucson

• Ashley Sauciuc, University of Arizona-Tucson