My coworker makes what?! (When knowing more is not a good thing)
There may be yet another explanation for why federal employees have long been less satisfied in their jobs than their private sector counterparts, a new study highlighted in Slate Tuesday reveals. Researchers from Berkeley and Princeton found that workers who know what their peers make, especially if they earn below-median pay, are more likely to be disgruntled than their blissfully ignorant peers.
Some HR thinkers have argued that more transparency would lead to better motivation and overall job happiness. If that's true, federal employees, who have access to databases, public records and water cooler chatter over who makes what, should be much happier than their private-sector peers. But they're not, according to data from the Partnership for Public Service, and FedBlog's Tom Shoop wonders if a lack of pay secrets might be one reason.
One might argue, as HR gurus have, that knowing how you stand among your peers would make you motivated to perform better, in hopes of earning more. But the Berkeley and Princeton researchers argue the opposite. The study authors emailed University of California employees about a new Web site that listed the salaries of all of the university system's employees, and then followed up to see how they felt about receiving the new information. Those who made less than median incomes reported more dissatisfaction and were more likely to say they'd be looking for a job sometime soon.
But those who made more than the median incomes did not report any kind of higher satisfaction from making more than their peers. Rather, they likely assume they're worth it, and see the data as little more than confirmation of their superiority.
The study is a reminder, Slate's Ray Fisman notes, of the increasing recognition by economists that humans are actually quite social when it comes to economics. Our salary doesn't just make us happy or unhappy if we can (or can't) cover our mortgage or buy an iPad for our spouse for Christmas. Rather, we are constantly comparing ourselves and what we earn to those around us.
The study reminds me of a conversation I had with the smart behavioral economist Dan Ariely, author of the popular book Predictably Irrational, when I was reporting this story about all the pay cuts companies were exacting during the depths of the recession. He argued that while no one likes a pay reduction, they're more palatable when everyone's getting them--precisely because salary is what he calls a "positional good." "At some level you care more about how much money you make compared with other people than the absolute level," he said. "So if you reduce pay at the whole company, you in a sense keep the relative position the same."
It's hard to say what federal managers should do with the study's findings other than to look for other ways to motivate their people. But business leaders outside the public sphere who've been encouraged by HR gurus to create more transparency in their compensation systems may want to think hard about changing course. Opening up salary data may reveal truths, but doing so also has its consequences.
September 29, 2010; 11:47 AM ET |
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