How to Keep Performance Rankings from Killing Cooperation

The common practice of ranking employees against one another comes with a downside: People may be less inclined to cooperate with their coworkers for fear of losing ground themselves. Think of a sales team that benefits from sharing leads but whose members are rated and compensated according ta individual productivity. A new study documents this effect and finds an antidote: Posting information about how people are helping one another can keep cooperation alive.

The researchers recruited 592 subjects for a decision-making game in which people could transfer points to others over multiple rounds. When rankings were introduced showing how many points each subject possessed, point transfers plummeted. But when the information also included the extent to which each person had previously shared his or her points, cooperation bounced back, eventually reaching the level achieved before the rankings were introduced. This happened, the researchers say, because people acted to reduce imbalances they saw.

“If managers seek to develop a pay-it-forward culture of helping… they must pay careful attention to the potentially disruptive effects of performance rankings:’ the researchers write. “Our findings suggest that managers can maintain or restore cooperation, without changing the underlying performance appraisal system, by displaying and offering recognition for employees’ prosocial contributions. That might involve peer-to-peer bonus systems, service awards and other public acknowledgments of those who go out of their way to be helpful, and performance reviews that explicitly include measures of cooperation, they say.

Source: Robust S y stems of Cooperation in the Presence of Ranking s: How Displaying Prosocial Contributions Can Offset the Disruptive Effects of Performance Rankings, by Cassandra R. Chambers and Wayne E. Baker (Organization Science forthcoming)