(From Knowledge@Wharton ) — We live in a world full of benchmarks and rankings. Consumers use them to compare the latest gadgets. Parents and policy makers rely on them to assess schools and other public institutions, and sports fans like them for help in sizing up their favorite teams. But what about when rankings are used at the office for appraising staff performance? It’s often assumed that employees who are benchmarked against each other work harder, to either hang onto a high ranking or raise a low ranking. However, Iwan Barankay, a management professor at Wharton, calls that assumption into question in a new study titled, “Rankings and Social Tournaments: Evidence from a Field Experiment.” “Many managers think that giving workers feedback about their performance relative to their peers inspires them to become more competitive — to work harder to catch up, or excel even more. But in fact, the opposite happens,” says Barankay, whose previous research and teaching has focused on personnel and labor economics. “Workers can become complacent and de-motivated. People who rank highly think, ‘I am already number one, so why try harder?’ And people who are far behind can become depressed about their work and give up.” Read more.

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Ranking Employees: Why Comparing Workers to Their Peers Can Often Backfire