Feedback quality and performance in organisations

Abstract

The provision of feedback is fundamental for promoting employee performance in modern organisations; however, little is known about how the quality of feedback affects performance. We report an experiment where subjects perform a real-effort task repeatedly in a flat-wage environment which varies the quality of feedback across treatments. In the baseline treatment, subjects receive no feedback about their rank in their group. In the two main treatments, feedback quality varies in that subjects know (“High-Quality Feedback”) or do not know (“Low-Quality Feedback”) their exact rank in their group. We show that the quality of feedback is an important driver of productivity. Average performance is significantly higher for high-quality feedback than for low-quality or no feedback, where no significant overall performance differences are observed. Our results have significant implications for designing and implementing cost-effective policies within organisations.