Our interpretation of what constitutes a fair salary is strongly skewed by our own perspectives. Our perceptions of unfairness, whether factual or not, can breed envy, discontent and lower productivity.
Have you ever revealed how much you earn to a co-worker? Your answer to that question may depend on your age.
Comparing salaries has long been a social taboo in the United States, but members of the Millennial generation — people born in the 1980s and 1990s — are changing that, according to Kevin Hallock, director of Cornell University’s Institute for Compensation Studies.
When 25-year-old Dustin Zick was preparing to leave his job with an online retailer, he compared salaries with five or six co-workers, write Lauren Weber and Rachel Emma Silverman in The Wall Street Journal . Several of the co-workers strategised about salaries they hoped to attain and how they might negotiate for them.
The discussions helped Zick meet his target salary at his next job.
Accustomed to sharing minute details of their lives on Facebook and Twitter, Millennials appear to be carrying that penchant for self-disclosure into their work lives.
Websites such as Glassdoor.com, where people can post their salaries and other information about their jobs, are spurring this trend. That may be bad news for employers, who see value in encouraging employees to keep mum about their salaries.
Employers have long believed that open discussions of salaries can create problems in the workplace. Knowledge of pay differences can reduce morale and productivity, researchers have found.
To take just one example, the smaller the salary gap between the highest and lowest-paid players within Major League Baseball teams, the better the team’s performance, according to Craig Depken, a professor of economics at the University of North Carolina at Charlotte. When we feel unfairly compensated, relative to others, we may not work as hard as we would otherwise.
Human beings have a strong desire for fairness. Yet our interpretation of what constitutes a fair salary is strongly skewed by our own perspectives.
If you learn that a colleague who has the same job earns more than you do, you may overlook the fact that she has more experience or has taken on greater responsibilities. Our perceptions of unfairness, whether factual or not, can breed envy, discontent and lower productivity.
Moreover, we tend to be highly driven by status concerns — that is, we care a great deal about how we measure up to others.
Finding out that someone you consider to be a peer is earning more than you do could cause you to be less satisfied with your own accomplishments and also more displeased with your organisation.
If salary disclosure is, indeed, a growing trend, how can managers and employees engage in salary negotiations that satisfy both parties’ interests?
For employees, it’s important to move beyond your own perspective to consider possible explanations for pay discrepancies that you might have overlooked, such as whether similar-seeming colleagues have stronger credentials, greater seniority or longer work hours.
Consult others in your field or review objective industry standards before making demands that could offend or annoy your employer.
If you do find solid evidence that you are underpaid, present your employer with the facts as you see them, being careful to stress that you believe any discrepancy is unintentional.
As for employers, many rely on elaborate job grade systems that divide employees into levels with set salaries.
Such clear guidelines may seem rigid, yet they can improve the odds that employees will feel they are fairly treated relative to others at their level.
Some employers are throwing the old rules about salary sharing out of the window and striving for complete transparency.
The New York data analytics company SumAll, for example, reveals pay scales and individual salaries companywide.
SumAll believes its employees are more efficient when they aren’t trying to guess how much others are earning, according to The Wall Street Journal.
© 2013 Harvard