In this paper, we study whether performance feedback can serve as an instrument for firms to increase employee retention. Feedback on the relative performance may affect individual job search behavior differently depending on workers’ relative rank among their peers. In line with these considerations, empirical evidence based on panel employer-employee data shows that employees performing below the median decrease their turnover intentions after the implementation of a performance feedback system at the establishment level. We find no effect for employees performing above the median.
Pohlan, Laura and Susanne Steffes (2022), Performance Feedback and Job Search Behavior: Empirical Evidence From Linked Employer-Employee Data, ZEW Discussion Paper No. 22-048, Mannheim.