Getting employee feedback right

New research highlights the critical impact that three factors — target, distance and valence — have on how people receive and react to peer performance reviews

Providing employees (and in some cases peers and managers) feedback on their performance is such a ubiquitous part of business life that it’s easy to assume that we understand how it works. However, the reality is that employee feedback is a complex issue and thus a topic of continued research focus. Indeed, a recent study from a team at UCLA makes a strong contribution to this field by breaking down the process of feedback into three dimensions and then asking how each of these dimensions impacts the efficacy of the feedback process.

As most managers understand, when we give feedback to an employee, we’re typically communicating at least three things: the reference point (e.g., average or high performance), the employee’s status against that reference, and the gap from actual to target performance. The authors of this new study note that even this simple scenario presents a manager with a set of interesting decisions:

Suppose you are a manager wanting to motivate your employees to work harder. You have heard from your colleagues at other firms that they use a quarterly leaderboard to motivate their staff through peer comparisons, so you decide to do the same. Along with providing individual performance feedback in a report to each employee, the report also compares the employee’s performance relative to their peers. But which peers should you choose for this report? For example, should you compare each employee to the median team performance? Or should you compare each employee to a group of high performers from the team, such as the top 20%? If you provided the median comparison, someone in the 52nd percentile would be two points ahead of the reference group. But if you provided the top-performer comparison, that very same person would be 28 percentile points behind the reference group.

Since most managers want feedback to improve performance, the situation noted above led the researchers to wonder how the manager’s selections would influence employee reaction and subsequent performance. Put another way, the authors wanted to understand what feedback would be the most effective in increasing employee performance?