PAST PROJECT FAILURE IMPROVES WORKERS'' PRODUCTIVITY: Experimental evidence

28 Mar 2018

Hearing about past organisational failure acts as a productivity boost for workers, according to research by Sabrina Jeworrek, Vanessa Mertins and Michael Vlassopoulos, to be presented at the Royal Economic Society''s annual conference at the University of Sussex in Brighton in March 2018.

Failure in organisations is a very common phenomenon, yet little is known about whether past failure affects workers'' subsequent performance. The authors conducted a field experiment in which they followed up a failed mail campaign to attract new volunteers with a phone campaign pursuing the same goal. They recruited temporary workers to carry out the phone campaign and randomly assigned them either to receive or not receive information about the previous failure and measure their performance.

The authors find that the informed workers perform better, in terms of both numbers dialled (about 14% improvement) and completed interviews (about 20% improvement).

So why do workers react to news about past failure? A likely mechanism behind the finding is that the information about past failure coupled with the decision of the employer to take a second crack at the task signals to workers the enhanced worthiness of the project. The implication is that disclosure of information on past organisational failure can raise the subsequent performance of workers and so managers should adopt practices that facilitate transparency.

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Suppose that you are the manager of an organisation interested in increasing the sales of a new product. You put together a team of employees to launch a marketing campaign to achieve this goal, but the campaign fails.

A few months later, the senior management gives a second chance to pursue the same goal as before, only this time through restructuring the sales team. You are contemplating whether it is a good idea to inform the team that the previous attempt to increase sales through the marketing campaign was unsuccessful.

The answer is not obvious. On the one hand, informing workers about past failure signals that the particular goal is hard to achieve and may thus have a discouraging effect on workers'' motivation.

On the other hand, the mere decision of the employer to follow-up the previous failure with a second attempt to achieve the goal signals to the workers that the objective is particularly valuable for the organisation. This information can enhance the meaningfulness of the job and may thus have an encouraging effect on workers'' motivation.

In which direction performance is affected is an empirical question that is addressed in this study through a field experiment carried out in a medium-size city in Germany. The study builds on an on-going partnership with a local volunteering agency, which puts people interested in volunteering in contact with suitable charities and associations.

Initially, temporary workers assisted in a letter campaign that aimed at attracting new volunteers. But the campaign proved to be particularly unsuccessful.

Close on the heels of the previous failed campaign, the authors conducted a phone survey aimed at raising the local population''s awareness of volunteering opportunities. They recruited temporary workers to carry out the phone campaign and randomly assigned them to either receive (treatment group) or not receive (control group) information about the previous failed mail campaign. Subsequently, they measured their performance on the new phone campaign.

The authors find that workers in the treatment group perform better at the phone campaign – in terms of both numbers dialled (about 14% improvement) and completed interviews (about 20% improvement) – regardless of whether they had previously worked on the failed mail campaign.

Why do workers react to news about past failure? A likely mechanism behind the finding is that the information about past failure coupled with the decision of the employer to take a second crack at the task signals to agents the enhanced worthiness of the project.

The message of this research is that disclosure of information on past organisational failure can raise the subsequent performance of workers and so managers should adopt practices that facilitate transparency.

''The good news about bad news'': Feedback about past organizational failure and its impact on worker productivity, by Sabrina Jeworrek, Vanessa Mertins and Michael Vlassopoulos. IWH Discussion Papers No. 1/2018.

Sabrina Jeworrek

+49 345 7753 730 | sabrina.jeworrek@iwh-halle.de

Michael Vlassopoulos

02380 593268 | m.vlassopoulos@soton.ac.uk