Dive Brief:

• A New York Times article reports that while Big Data has made it possible to measure employee performance more thoroughly than ever, recent studies at both the Wharton School at the University of Pennsylvania and New York University offer a warning: Be careful about how you deploy that data.
• In a study of 1,500 furniture sales workers conducted over three years in North America, one group of sales workers was shown how their sales ranked compared with their colleagues. Another group was not shown a comparison, but only their individual results. The latter group achieved higher subsequent sales than those who were aware of their comparative ranking.
• At NYU's study of employee rankings, a group of researchers analyzed the fuel use and driving behavior of truck drivers with a similar comparison. Some were shown individual data and others were shown their ranking alongside colleagues. Even though management explicitly stated that the data was intended to make the company safer and more efficient and would not be used to evaluate individual performance, the drivers in the team-based environment still viewed the ranked data with suspicion and resentment.

Dive Insight:

In both cases, the idea was that lower-ranking employees would strive to improve, while higher-ranking ones will work to maintain their edge. But human nature combined with simple math caused the lower-ranking workers to falter, according to Iwan Barankay, an associate professor at Wharton. Most people optimistically assume that they are above average in their performance, he said. But most people, when measured against one another, will inevitably rank as average or below average. For these people, seeing their rank is demoralizing, causing their performance to wilt.

Steven Blader, an associate professor of management and organizations at New York University, told the Times that competition in a collaborative environment doesn’t work well. In team-based environments, it may be better to inform each employee of his or her performance individually rather than as part of a group ranking. But if a company’s culture is self-focused rather than team-focused, publicizing rankings may be effective, he said in the article.