Reference points at work: Framing of performance, money and time in communication

This thesis explores how framing of communication about project progress can influence beliefs about satisfaction, motivation to invest effort, and investment preferences. It further investigates the strength of feelings associated with over- and underperformances relative to reference points, and how contrasting performances with a reference point can influence motivation to overstate what has been achieved. It is also compares how describing performances in terms of work, money and time can shape perceptions, feelings and motivations. <br>
Study I explores how framing of project progress in terms of time and work can influence beliefs about whether performance is satisfactory and whether more effort needs to be invested. Work progress can be described in terms of how much is done versus how much remains to be completed. Temporal progress can be described in terms of time spent versus time left. Five experiments with responses from 503 participants (85% students, 15% managers) are reported showing that such frames have predictable implications. Statements by a team leader about time spent and work left are perceived as suggestions to “hurry up”, whereas complementary statements about work done and time left indicate that the team can take it more easy. The first set of statements further implies that the team is behind schedule, whereas the last two statements suggest that the team is ahead of the plan. In line with this, speakers preferred work done and time left statements when they were ahead of schedule, but not when they were behind. “Hurry up” and “behind schedule” interpretations were also shown to be dependent upon stage, being more prominent in the final stages than during the initial stages of a project. <br>
Study II explores how framing of project progress can reveal investment intentions in a sunk cost option. 193 participants (65% managers, 35% students) were asked to evaluate progress statements referring to a failing project. Past oriented statements about the amount work done, budget and time spent (75%), were perceived as a preference for the sunk costs option to a larger extent than future-oriented statements describing that 25% of the work, budget and time remained. But when progress was described relative to explicit reference points and qualitative modifiers were added to the numerical progress amounts, this strongly influenced the beliefs about investment intentions. Progress was described as more than 70% done/spent or less than 80% done/spent, more than 20% or less than 30% remaining, and almost 50% done/spent or almost 50% remaining. These different ways of framing performance were interpreted as even stronger arguments in support of the two different investment options, depending on the perceived amounts of achievements compared with the perceived amounts of remaining resources. <br>
Study III compares the strength of positive and negative feelings associated with over- and underperformances in terms of money, performance time and completion time. Results from a questionnaire answered by 284 top and middle managers in six experimental conditions show that doing better than expected can generate stronger satisfaction than performing below expectations generates dissatisfaction. Managers also feel satisfied about performances that match expectations, and are more surprised by over- than by underperformances. Performance time (in terms of hours, days, or weeks) was judged similarly as monetary performance. However, when temporal performance was described as completion time relative to a milestone or a deadline, deviations became more salient and were expected to produce stronger feelings of satisfaction and dissatisfaction. <br>
Study IV investigates managers’ beliefs about goals and misconduct in terms of performance overstatements. 772 top- and mid-level managers predicted if reference points such as performance goals, budgets and plans can make it more likely that individuals and firms will exaggerate what they have achieved. Managers believe that goals can influence individuals to overstate performances, particularly in terms of time spent on a task. When goals are achieved, this is expected to inhibit motivation for overstating performances, for firms as well as individuals. For firms, performance relative to goals is not expected to influence misconduct. Low and high performing firms are believed to be equally prone to misconduct when they underperform relative to goals. When managers judge the likelihood of misconduct, they are influenced by the likelihood of goal achievement as well as the magnitudes of performance overstatement. <br>
The results from Study I and II are discussed in terms of how linguistic reference points and framing of communication can serve productive pragmatic purposes in communication at work. The results from Study III and IV are discussed in terms of how reference points, mental accounting, performance expectations, and performance dimensions (work, money, time) can influence feelings and motivations associated with performance deviations