Some companies actively discourage employees from talking to each other about their salaries. (Some companies require employees to sign documents that stipulate they will not disclose their pay, benefits, etc., to other employees.) Others, like Buffer, disclose every employee's pay rate.

I tend to fall into the "don't disclose" camp.

But a new study shows that in at least one case, I'm wrong.

When employees find out that they make less than their peers, they tend to work less hard. That makes sense, if only because it's happened to me.

But when employees find out their boss makes more than they had guessed, they work harder.

They work longer hours. They send more emails. Their sales figures go up. 

In fact, the larger the difference between what employees think their boss makes and what their boss actually makes, the harder they work.

According to an author of the study:

"Employees are motivated rather than embittered by their bosses' higher salaries.

"The higher salary is aspirational. Employees have an extra incentive to work hard, so they can be promoted and perhaps one day make their bosses' pay."

Odd things happen when we start to compare.

When I was a supervisor, I was happy with what I earned until I learned another supervisor -- one who was just skating by -- made a lot more money than me. 

Then I was unhappy.

Yet all that had changed was the addition of one small piece of knowledge. My pay hadn't changed, my duties hadn't changed, my opportunities hadn't changed -- but how I felt about myself changed. 

Comparisons and emotions colored my perception. "Great" money no longer seemed so great, because it wasn't nearly as good as what someone else made. That's why comparing salaries at the peer level can be a real problem -- especially when we also compare our output to the results of that output.

I kept telling myself all that mattered was that I was happy with what made. I kept telling myself what others earned was irrelevant. I kept telling myself nothing had changed. But of course everything had changed, because now I knew.

And to my discredit, I never got over it. I couldn't change how much he earned but I could change how hard I worked. I still worked hard, but I no longer worked that hard.

Yet finding out that your boss makes a lot more than you imagined has the opposite effect: In that case, you'll work even harder.

That goal you've been working toward? It's even more desirable.

As the study authors say, "While higher perceived peer salary decreases effort, output, and retention, higher perceived manager salary has a positive effect on those same outcomes."

That might be reason enough to start letting your employees know what you make.

Now it's your turn: Would you work harder if you found out your boss makes more than you think? And would you work less hard if you found out your peers make more than you?

Published on: Aug 6, 2018
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