Employee Recognition and Performance: A Field Experiment

Recognition is an important source of employee motivation. But how should managers allocate recognition: should they praise all? Or should they recognize only extraordinary performances? This issue has not yet been addressed sufficiently. On the one hand, exclusive recognition might raise the performance of high-performers even further as they feel acknowledged and motivated by the public praise. However, this might come at the cost of discouraging and frustrating the non-recipients. On the other hand, non-recipients might respond positively as they are encouraged to catch up with the high-performers while the latter might rest on their laurels.

We tackle this research question by conducting a field experiment which investigates the causal effect of recognition on work performance. We hired more than 300 workers for a three-hour data-entry job. After two hours of work, we randomized the provision of unannounced recognition by handing out a thank-you card, which was personally signed by the head of the research institute. By varying the number of recipients of the thank-you card we were able to study the effect of exclusive recognition. Depending on the treatment, we assigned a thank-you card either to the best one, the best three, or all workers of a work group.

We find that recognition significantly increases subsequent performance, and in particular so if recognition is exclusively provided to the best performers. Recognition to the best three performers in a group yields the largest effect on workers' productivity in comparison with either recognition to all employees or recognition to the best performer. Interestingly, performance increases in response to exclusive recognition are mainly driven by strong positive effects of non-recipients.

Conformity preferences are the most likely reason for these responses. Upon learning that one does not belong to the best three performers in a group of eight, non-recipients feel inclined to improve performance so as to adhere to the apparent group norm. In line with this interpretation, we find weaker (but still positive) responses of non-recipients when only the best performer in a group receives recognition as this provides a weaker signal of low relative performance than belonging to the bottom five out of eight workers. However, conformity preferences cannot explain all of our results. In particular, recipients of recognition do not decrease performance, as conformity would suggest, but rather (although insignificantly) increase it. A natural candidate to reconcile these findings is that, in addition to conformity preferences, workers are also reciprocal and hence increase performance in response to recognition.

Our findings suggest that recognition can be a cost-effective tool for increasing average effort, especially when recognition is limited to a substantial subset of high performers.

Bradler, Christiane, Robert Dur, Susanne Neckermann and Arjan Non (2013), Employee Recognition and Performance: A Field Experiment, ZEW Discussion Paper No. 13-017, Mannheim.