Management Accounting Section Midyear Meeting

Employee Recognition: The Effect of Recognition Scope on Unrecognized Lower-Rank Employees’ Subsequent Motivation

• In Event: Break/Research Exhibition 3: Incentives and Cost Management

Abstract

Employee recognition is one of the most popular techniques that firms use to motivate employees in organizations. When managers design an employee recognition program, an important decision is to determine the scope of employee recognition—whether a recognition program contains employees from a single hierarchy (same-rank employee recognition) or from multiple hierarchies (multiple-rank employee recognition). This study investigates the interaction effect of the scope of employee recognition and the level of disclosed best performance on unrecognized lower-rank employees’ subsequent motivation. We predict and find that an increase in the disclosure of the best performance from a higher-rank employee in multiple-rank employee recognition motivates unrecognized lower-rank employees to a greater extent in the subsequent periods, compared to an increase in the disclosure of the best performance from a peer in same-rank employee recognition. Results of this study contribute to accounting research on tournaments and relative performance information by documenting a motivational effect of the disclosure of a high performance from a higher-rank employee on lower-rank employees’ perception of future selves and subsequent motivation and performance. Results also contribute to practice by informing firms about how to design employee recognition programs to affect the efficacy of employee recognition programs.

Authors

• Ta Tung Cheng, Georgia State University

• Flora Hailan Zhou, Bentley University