Study: Ranking employee X against employee Y yields – zilch

Praising employees for a job well done: good idea.

Praising employees for doing a better job than others: not so good.

Everybody loses when managers rank employees against one another, according to research by Iwan Barankay, a professor at the University of Pennsylvania’s Wharton School.

He studied 330 people who signed up with Amazon.com’s Mechanical Turk platform to do skilled piecework. Barankay divided them into two groups: Workers in the first were e-mailed a ranking of their work; those in the second got no ranking.

The researcher then invited both groups to accept more assignments. Just 42% of workers in the ranked group came back, compared with 66% of the non-ranked. And members of the first group who did return were 22% less productive.

The problem, according to Barankay: Top performers relax when they see their high ranking, while low-rankers get discouraged and quit trying.