Abstract
Public recognition is a powerful strategic tool for motivating individuals. Yet because high status recognition derives its desirability from scarcity, public recognition inevitably invites social comparisons. Since status recognition commonly corresponds with performance and accompanies tangible rewards, it is challenging to isolate pure social comparison costs. Leveraging a natural experiment in a large multinational organization, I provide novel evidence that employees are distinctly sensitive to status recognition beyond any material, career, or reputation concerns. When denied status recognition, employees are much more likely to exit the organization, despite receiving higher monetary rewards as recompense for nominal under-recognition. This study demonstrates the serious risks of using status recognition as an employee performance motivator. The analysis has broad implications for the strategic decisions organizations face when trying to motivate employees through nonmonetary reward systems.
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