A recent study has found that frequently asking workers to report on their progress can have a demotivational effect that dampens productivity, said CFO.com.

The study, by professors at the University of Illinois at Urbana-Champaign, involved asking 87 university students from undergraduate business courses to take a 30-minute, multiple-choice test of critical reasoning administered via computer. All subjects were able to monitor the passage of time and their total correct answers. Half of the subjects were told to report their scores to an in-person test administrator every 10 minutes, while the other half were asked to report only once, when they were done, by raising their hands for the administrator to check the screen and write down their correct answers without comment. Further, within these groups, half were told that the point of the test was to evaluate the quality of the questions, and half were told that the point was to evaluate their own critical reasoning skills.

What the researchers found was that, among those who were told that the point of the test was to evaluate question quality, there was little performance difference between those who reported their progress every 10 minutes and those who did not. In contrast, within the group told that the point was to evaluate their skills, those who had to report every 10 minutes did far worse than those who did not. Those who were asked to report only once averaged almost one third more correct answers than those asked to report three times.

The researchers believe that these results can be analogized to other research that finds that more frequent financial reporting induces short-term thinking that ultimately leads to lower performance for companies. They came to this conclusion via post-test questions that indicated that those who reported on their progress every 10 minutes had taken on what is called an "avoidance orientation," where the main focus is being done with the exercise rather than doing well on it. It seemed to increase people's anxiety, which led to poorer performance on the cognitive tasks.

Given these results, the study concluded that firms, despite their hunger for performance data on their workers, should refrain from micromanaging their day-to-day work lives.

The study, “The Effect of Performance Reporting Frequency on Employee Performance,” is in the July/August issue of The Accounting Review, a peer-reviewed journal published six times yearly by the American Accounting Association.