I use a laboratory experiment to examine the productive and counterproductive effects of providing employees nonpecuniary recognition based on measures of relative performance. I find that, on average, recognition programs increase both productive efforts (those intended to increase one's own performance) and counterproductive efforts (those intended to decrease peer performance) in a setting where it is salient to employees that they can exert both productive and counterproductive efforts. Interestingly, I also find that these effects are moderated by the Dark Triad of personalities, a group of three personality traits. My study reveals that recognition programs mainly lead individuals who score lower on the Dark Triad to increase counterproductive efforts and those who score higher on the Dark Triad to increase productive efforts. These results contribute to the literature on relative performance information by demonstrating that recognition programs can have both productive and counterproductive effects. However, whether these programs produce mainly a productive or counterproductive effect depends on important personality characteristics of the employees.

Many organizations whose core purpose is to advance a social mission pay employees below-market wages. We investigate two under-appreciated benefits of below-market pay in these social-mission organizations. In a series of experiments, we predict and find that, holding employees' outside opportunities constant, those attracted to social-mission organizations that pay below-market wages perform better individually and cooperate more effectively in teams than those attracted to social-mission organizations that pay higher wages. The individual performance effect arises because below-market pay facilitates the selection of value-congruent employees who are naturally inclined to work hard for the organizational mission. The team cooperation effect arises because employees expect team members who have selected a social-mission job that pays below market to be more value-congruent and, therefore, more cooperative than those who have selected a social-mission job that pays higher wages. Collectively, we demonstrate that in social-mission organizations, offering below-market pay can yield selection benefits.

Penalty contracts are commonly utilized in developing countries. Such contracts may be perceived as unfair, potentially reducing employee motivation and performance. We predict that adding a second‐chance provision , an opportunity to reverse a penalty for poor performance if subsequent performance improves, could improve the effectiveness of penalty contracts. In a quasi field experiment at a company with two manufacturing facilities in Taiwan, we treated one facility with a traditional‐penalty contract without a second‐chance provision and the other with a penalty contract with a second‐chance provision. We observe a significant difference in the two treatment effects, with employee performance decreasing significantly after the traditional‐penalty treatment but showing no decrease when a second‐chance provision was included. Further analysis reveals that this difference is mediated by employees' fairness perceptions. These results provide valuable insights to governments, nongovernmental organizations, and multinationals as they work together to improve the fairness of global compensation practices.

Creativity-dependent companies often implement failure disclosure programs to encourage employees to publicly disclose failures encountered in exploration activities with a focus on learning. We examine the effects of failure disclosure on employees’ exploration performance using an experiment in which participants perform a letter-search task by counting the search letters in each question (i.e., exploitation) or identifying an embedded shortcut that applies to all questions (i.e., exploration). We manipulate two factors: (1) whether participants are encouraged to disclose their failed attempts at finding the shortcut to future participants and (2) whether they are evaluated for their task-related skills. We predict and find failure disclosure increases the likelihood of shortcut identification in the presence of evaluation, and this effect is mitigated in the absence of evaluation. Because evaluation is typically present in natural work settings, our theory and results suggest failure disclosure is an effective mechanism to increase employees’ exploration performance.

Organizations are increasingly utilizing remote monitoring tools that can track the total time telecommuting employees spend on work activities. We examine whether and how this information can eliminate a specific gender-based bias in the performance evaluations of telecommuting parents. Specifically, managers tend to evaluate telecommuting mothers less favorably than telecommuting fathers when performance outcomes are unfavorable, due to biased effort attribution. The availability of total work-time information can effectively eliminate this bias. Results from our main experiment and four supplemental experiments support our predictions and provide process-level evidence for our theory. Our theory and results suggest that leveraging remote monitoring tools’ capacity to track employees’ total work time can enhance the fairness and effectiveness of performance evaluations for telecommuting mothers.

Conventional wisdom suggests that frequent performance reporting is beneficial for decision making, as it can enhance timeliness and usefulness of the reported information for decision making. We investigate a potential motivational cost of frequent performance reporting. Using goal orientation theory, we predict and find that frequent performance reporting has negative motivational and performance implications when employees know or assume that the information they report will be used to evaluate their task-related skill. Our theory and results suggest that organizations need to balance the informational benefits and motivational costs of frequent reporting when designing their performance reporting systems. In addition, our theory and results can help organizations begin to design solutions that take advantage of the informational advantage of frequent reporting while minimizing its motivational costs.

We investigate a potential selection benefit of stock-based compensation for rank-and-file employees, whose pay under this compensation form is insensitive to their individual efforts. We use a laboratory experiment to demonstrate that individuals with higher levels of dispositional optimism are more likely to choose compensation that is contingent on a company's future stock price than to choose fixed pay, even after controlling for the individual's risk preferences. Furthermore, compared to participants selecting fixed pay, those selecting stock-based compensation also perform better on a challenging problem-solving task, a result that we show is due to their higher levels of dispositional optimism. Collectively, we demonstrate that stock-based compensation can have productivity-enhancing effects, even if stock prices are completely insensitive to individual efforts. In doing so, we provide a partial explanation for the puzzling prevalence of stock-based compensation plans at the rank-and-file level and contribute to the broader contract-selection literature.

We examine the effect of performance-based pay on misreporting intended to benefit a social mission. We show that performance-based pay decreases people's propensity to misreport for a social mission in a not-for-profit setting (Experiment 1). We similarly show that in a for-profit setting, performance-based pay also decreases misreporting propensity for a social mission, although not for a non-social mission (Experiment 2). Finally, using a framed field experiment with participants attending a conference hosted by a real charity, we show that performance-based pay reduces actual misreporting when misreporting leads to more donations for the charity (Experiment 3). These results are consistent with our theory suggesting that, relative to fixed pay, performance-based pay imposes additional costs on misreporting employees' self-concepts of benevolence and honesty.

In two experiments, we examine whether performance-contingent incentives facilitate the creative process by enhancing the initial preparation that precedes creative incubation. The defining characteristic of both experiments is a second-stage task that is separated in time from the first-stage implementation of different incentive schemes. In Experiment 1, the second stage takes place ten days after we implement conditions with quantity incentives, high-creativity incentives, incentives with a minimum-creativity threshold, and a fixed-pay control condition. In Experiment 2, we test the effects of incentives with an incubation period of 20 minutes, during which an experimenter escorts participants on a walk between compensated work periods. In both experiments, we find that participants with quantity incentives outperform the high-creativity production of their fixed-pay counterparts only in the second-stage task. Mediation analyses suggest that quantity-incentivized participants' propensity to try more divergent ideas in the first stage sparks their creativity advantage in the second stage.