Would you be angry? jealous? quit? ask for a raise? motivated to work harder?
Just kidding about that last one…
A new study shows, among other things, that employees tend to underestimate their bosses’ compensation, but that they work harder when they find out that their bosses make more than they had guessed.
The researchers found that employees who learned that their bosses’ salaries were higher than they expected would spend more time in the office, send more emails and increase their sales numbers. In an interesting twist, the larger the salary misperception was, the more productive the employee was likely to become. But let’s put “more time” in perspective. According to the paper, employees who find that their boss’s salary is 10% more than they had imagined will spend about five more minutes in the office a day.
The researchers found it surprising that employees are motivated rather than embittered by their bosses’ higher salaries. The reason, according to the researchers, is that 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.
However, the same research study found that when employees discover that their peers make more than they do, they tend to slack off. Employees who discovered that their co-workers were better paid than they were paid were less productive. Such results are consistent with prior studies. I guess no one likes finding out that your co-workers make more than you do, and react negatively upon learning such news..
Assuming that your company has a generous compensation package, then one of the takeaways from this study is that upper management should be more transparent about what their compensation is, since it could be a motivational tool for junior employees.
I was not able to find anything about what happens to productivity if you find out your boss is making less than you thought. I guess if the results are consistent, then you would expect that a lower than expected salary for a boss would decrease the productivity of those that report to the boss.
Another takeaway seems to be that all managers now have a powerful negotiating tool at their disposal when it comes to salary discussions.
When it’s time to discuss your salary for the following year, just tell your boss, “pay me more than you think my employees might guess I earn. By doing so, my employees’ productivity will increase. Such a productivity increase will more than make up for my increased salary.”
Your boss might wonder what you’re talking about. If that’s the case, here’s the link to the 50-page research study to support your claim.
Who could argue with that sort of evidence?