Multitasking and the Benefits of Objective Performance Measurement – Evidence from a Field Experiment

Dirk Sliwka (University of Cologne, Germany)

We examine the benefits of objective performance measurement in a field experiment conducted in a retail bank. At the outset objective performance measures of profits in each branch were only available on the branch level and managers allocated bonuses to their employees based on subjective assessments. In a subset of the branches, managers then obtained access to individual performance measures. We find a significant positive impact of objective performance measurement on effort and financial performance. This productivity increase is mainly driven by larger branches and higher sales for non-core products which is well in line with a formal economic model on the optimal allocation of monitoring efforts under subjective evaluations in multitask environments.

(joint work with Kathrin Manthei).

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Does the fear of exclusion improve team-production?

Randolph Sloof (University of Amsterdam)

In experiments on standard weakest-link games, groups usually coordinate on the worst equilibrium. In this paper, we investigate if the fear of exclusion explains the difference between these experimental results and observations in actual labor markets where teams often perform better. We include a manager in the game whose preferences are aligned with the team members. This manager can decide to replace some of the workers at a cost. Our treatment variables are the information the manager observes about the actual effort levels of the workers (full information vs. noisy signal), and the contract length (workers can be fired every period / only once in three periods / never). Our results show that the fear of exclusion has a profound effect on team performance; the most flexible contract induces the highest output, and the one with no firing possibility leads to the lowest one. There is no difference between the workers’ effort choices across noise and no noise settings for a fixed contract type.

(Joint work with Anita Kopányi-Peuker and Theo Offerman)