One of the main roles of accounting information is to help managers make the best decisions. Today, the problem often isn’t how to acquire and store information—advances in technology have given us a wealth of data at top speed—but rather determining what information is most valuable and when it should be used. To answer this question, we conducted a pilot project to examine how workers were affected by the detail and frequency of the performance feedback they received. In other words, how much detail should the feedback include and how often should the professionals receive it?
Our project, which was conducted with Multiasistencia, the leading insurance claims outsourcer in Spain, involved studying the behavior of repair professionals who received a monthly bonus based on achieving a customer satisfaction target. To understand how professionals responded to the amount of detail and the frequency of the feedback they received, we divided them into four groups. Each group received a different type of feedback: (1) detailed and weekly, (2) detailed and monthly, (3) summary and weekly, and (4) summary and monthly.
If professionals were able to process and use all of the information available to them at any moment in time, we would expect the best performance when they received the most information at the greatest frequency: detailed and weekly. Yet the results suggest that sometimes “less is more”: That is, more detailed but less frequent (monthly) feedback can lead to better performance.
The reasons for this may lie in our general tendency to focus on the most recent information we have received, sometimes at the expense of the bigger picture. For managers, this means that it’s important to weigh the benefits of detailed, immediately available information against the ability of the recipients to properly process that information. (Our complete findings can be found in “The Performance Effect of Feedback Frequency and Detail: Evidence from a Field Experiment in Customer Satisfaction,” Journal of Accounting Research, December 2017.)
HOW WORKERS RECEIVE AND PROCESS FEEDBACK
Conventional wisdom would say that when workers receive more detailed and more frequent feedback information, they should perform better, especially when there is an incentive such as a bonus involved.
Part of what we wanted to do in our pilot was to test this traditional view of “more is better.” We also wanted to look at the combined impact of feedback detail and feedback frequency since most existing studies looked at only one or the other.
The customer feedback that fed into the monthly bonus system in our pilot was based on Net Promoter Score (NPS). This involves asking customers the likelihood that they will recommend a good or service, rated on a scale of 0-10. Customers that give scores of 9-10 are defined as promoters, 7-8 as passives, and 0-6 as detractors. The key metric for professionals in our pilot to be eligible for bonuses was the number of detractors.
Professionals who received detailed feedback were given the list of jobs they had performed with any related detractor scores. Those who received summary feedback were only given the total number of detractors they had received in the same period.
More detail was helpful to the professionals, but only when it was delivered in the monthly group. This group of professionals (detailed and monthly) outperformed all the other feedback combinations (detailed and weekly, summary and weekly, and summary and monthly).
THE IMPACT OF FREQUENT FEEDBACK
Proponents of the traditional view may argue that professionals gave the appropriate weight to all the information received and behaved as expected given the bonus system. For example, if workers receiving weekly feedback knew that they were already out of the running for a bonus near the end of a month, they might give up and perform poorly during the final week. If this were true, it would be best to tweak the incentive system. We did indeed see results matching this kind of behavior at Multiasistencia.
Yet the most important explanation for professionals’ performance across all groups was a preoccupation with the latest report. Professionals tended to focus on the most salient piece of feedback available, zeroing in on recent information and discounting what came before.
They did this because receiving and processing more information more often requires a lot of effort and attention. When information was too frequent, they lost perspective and behaved in ways that didn’t actually help them to improve or achieve their goals.
To demonstrate this, we took advantage of the fact that the bonus was monthly and that each month was a fresh start. In other words, performance in one month had no impact on the following month’s bonus. Thus, it wouldn’t make sense for professionals to underperform in the first week of the month when they had received a negative report in the last week of the previous month—and yet this is precisely what happened. They overreacted to the feedback and changed the way they served customers without taking into account all the information they had. Focused on the negative aspect of that most recent report, they were harming their chances to achieve the next bonus.
In contrast, the professionals who received detailed monthly feedback had the information they needed to improve their performance and the appropriate timescale to process that information so that they didn’t focus too much on a negative event in the recent past. They showed the most improvement not only compared to the other groups during the pilot period, but also compared to their performance in the months before the pilot began.
What this tells us is that managers giving feedback to workers need to consider not just the amount of information that should be shared, but also the best time to share that information regularly. Sharing feedback less often can actually be more valuable for performance improvement because it allows workers to put information in context rather than fixate on the latest incidents, whether positive or negative.
The best time to share information will of course depend on the particular context of each company and industry. In some situations, tasks take longer to perform or aren’t repeated as often, which might make it more difficult to learn from monthly information. And in some industries (e.g., brokerage firms), delaying information delivery may not be an option. Still, wherever there is scope for learning and workers have some discretion about how to spend their effort, our findings about feedback delivery should be applicable.
As you can see, our research upends the traditional view of “more is better” when it comes to information delivery. The evidence suggests that “less (frequent) is more” for workers trying to learn from feedback to improve their performance and achieve a bonus. When managers are delivering feedback to workers or designing systems for this delivery, giving workers enough time to process the information is key.
Multiasistencia professionals are independent contractors that are part of an external repair network not employees of the company. However, we believe our findings do extrapolate to other settings in which an employment relationship may be present or not, such as retail associates, call center operators, or hotel managers.
February 2020
