Rather than getting your kid into the best possible primary school, it might be worth sending him or her to a weaker school and making sure the kid is at the top of the class. Chances are that will produce an achievement boost for years to come. Why that happens also holds a lesson for managers.
How ranking people influences motivation has been a highly controversial subject since the 1980s, when some economists argued that performance rank in the firm could be an appropriate basis for a compensation system. General Electric Chief Executive Officer Jack Welch compared employees on a bell curve and fired those at the left-hand tail of the distribution. The practice came to be known as “rank and yank,” though Welch hated the term, preferring “differentiation.”
The more recent conventional wisdom is that this doesn’t work. Wharton School of Management’s Iwan Barankay has done a number of experimental studies confirming this view. In a 2012 paper, for example, Barankay showed that removing rank feedback tends to increase sales performance. The intuitive explanation is that top performers who know they’re the best tend to slack off, and those at the lower end of the distribution give up trying to improve. A decade ago, GE gave up its ranking system; more recently, it even dropped annual performance reviews, and so have other large companies.
Welch, however, has continued defending the ranking system, writing in 2013:
Yes, I realise that some believe the bell-curve aspect of differentiation is “cruel.” That always strikes me as odd. We grade children in school, often as young as 9 or 10, and no one calls that cruel. But somehow adults can’t take it? Explain that one to me.
Indeed, many schools in Europe and the US rank pupils and that’s apparently having a powerful effect on how they perform. In a new paper, Richard Murphy of the University and Texas at Austin and Felix Weinhardt of the German Institute for Economic Research in Berlin show that an English primary school student who is ranked highly relative to other students in a subject – regardless of the absolute grade level, which could be objectively mediocre but still better than others’ in the same class – tends to perform better than peers nationally on tests in this subject at age 14 and 16.
That has long-term implications. Based on a dataset of 2.25 million students, Murphy and Weinhardt calculated that being at the top of a primary school class in a subject increases the probability of a student’s choosing this subject in high school by 20%.
The effect is stronger for boys than for girls. Murphy and Weinhardt attribute it, for a large part, to the increased confidence and engagement stimulated by a higher rank. The mechanism behind it is known as “big fish in a small pond.” In a 2015 paper, Benjamin Elsner and Ingo Isphording of the Institute of Labour Economics in Bonn, Germany showed that while studying with weaker peers in high school may have a negative effect on learning, the confidence and optimism boost from a high rank, as well as the increased attention students at the top of a class get from teachers, outweigh it and result in a better academic performance in college.
They argued that being in a top school may be damaging to students who don’t come out on top there. Being at the lower rank of the distribution, Elsner and Isphording showed in another paper, increases the probability of risky behaviours, such as fighting, alcohol and drug use.
The academic work on the importance of rank takes care to exclude reverse causality. Engaging in risky behaviours can result in being ranked lower, and better cognitive ability tends to lead to a higher rank, but the scholars corrected their results for these effects. These results leave little doubt that ranking influences students’ achievement and behaviour.
This has important implications for school choice. Sometimes a weaker school, especially at the primary level, is the optimal solution, especially if parents want to even out a girl’s chances of doing well at math and technical subjects. The confidence built early by a high rank in math can work wonders at later education stages, when various biases work to discourage a girl from going down that path.
When it comes to managing workers or students, the recent work on the effect of rankings shows that getting rid of bell curve systems may not be the ideal choice. Murphy and Weinhardt wrote:
To improve productivity, it would be optimal for managers or teachers to highlight an individual’s local rank position if that individual has a high local rank. If an individual is in a high-performing peer group and therefore may have a low local rank but high global rank, a manager should make the global rank more salient. For individuals who have low global and local ranks, managers should focus on absolute attainment, or focus on other tasks where the individual has higher ranks.
That’s sound advice. Welch isn’t wrong when he says employees demand candid feedback from their superiors; it’s just that the feedback, at school or at work, should be tailored to the individual.
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