Why the Latest Performance Signal Matters
Consider two employees with similar overall performance. One initially performs below colleagues but subsequently improves and receives positive recent performance information. The other starts strongly but receives negative information about their latest results. Although their cumulative performance may be comparable, is their subsequent performance likely to be the same?
In our forthcoming article in European Accounting Review, we examine how individuals perform after receiving contradictory performance signals. Drawing on recency theory, we predict that subsequent performance is more strongly associated with the latest signal. We test this prediction using more than 29,000 professional tennis matches in which players receive opposing performance signals before a deciding set. This setting allows us to observe individuals in the same overall position but arriving there after either a recent success or setback.
We find that a recent positive signal is associated with better subsequent performance than a recent negative signal. However, this relationship varies with the signal’s informativeness and the recipient’s characteristics. The recency relationship is weaker among individuals with characteristics associated with higher self-efficacy. We also document different patterns among men and women. Women tend to underperform following unexpected positive signals, consistent with choking under pressure, whereas men perform worse following recent setbacks, consistent with the Golem effect.
These findings have implications for performance-information systems. Managers should consider not only the information provided but also its sequence, timing and informativeness. The most recent signal may have a particularly strong association with employees’ motivation and subsequent performance. Moreover, these relationships are unlikely to be uniform across employees. Understanding differences in confidence, experience and responses to pressure may therefore be important when interpreting the relationship between performance information and subsequent performance.
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