Peer evaluation, ranking information and team performance : evidence from factory field experiments

Abstract

In modern manufacturing, workers are often organized into teams and motivated through performance-based rewards, with supervisors playing a key role in performance evaluation and pay allocation. However, limited supervision can lead to free-riding behaviors, undermining team performance. Some studies have proposed some interventions to mitigate this problem, but most of these studies were conducted in controlled laboratory settings which raised questions about their effectiveness in practice. This thesis instead addresses these issues in the field and examines the role of peer evaluation and ranking information provision. In the first study, I explore the impact of peer evaluation on team performance, demonstrating that it leads to higher performance compared to sole reliance on supervisor evaluations. Peer evaluation enhances the workers’ sense of being supervised, thus reducing free-riding and increasing effort. This result is influenced by workers' abilities. Peer evaluation does not significantly benefit high-ability workers due to ceiling effects and the crowding-out of intrinsic motivation. While for low-ability workers, peer evaluation significantly boosts effort and performance. The second study examines the impacts of providing ranking information – rankings to all workers in the group, only to the top 50% workers, or none – on team performance. The experimental results indicate that providing workers with team performance information significantly improves performance with providing ranking information to all workers in the group yielding the greatest benefits. Low-ranked workers are motivated to improve efforts to reach average performance levels, while high-ranked workers remain unaffected. This study contributes both practically and theoretically to the literature on incentive design. From a practical perspective, the findings provide valuable insights for companies seeking to enhance team performance through the reform of their incentive systems. From a theoretical standpoint, this thesis contributes to studies on enhancing the team performance of non-knowledge workers in real-life contexts, a group that has received comparatively less attention in previous research.