Knowing Your Co-Workers’ Salaries Makes You More Productive — Dollars and Sense
Discussing salaries is taboo in many workplaces, but maybe it shouldn’t be. New research suggests that knowing how your pay compares to your colleagues’ pay may make workers more productive.
This finding, which was published in the paper “Tournaments Without Prizes: Evidence from Personnel Records,” took a look at an experiment done in a German wholesaler’s warehouse.
The workers at the warehouse, whose salaries were partially based on job performance, asked that management make public everybody’s salary information. So they did, and they also revealed how each worker was ranked productivity-wise.
In the month before this information was released, but after the workers had been told it would be, overall productivity increased 2.8 percent. Then, once everyone learned where they stood, productivity jumped another 4 percent. The increase in productivity was spread fairly equally throughout the workforce, and only a few of the 207 workers saw a productivity decrease.
This suggests that when workers learn what their colleagues make those who do comparatively well are motivated to work even harder to keep their spots, while those who are getting paid less work harder so they can climb higher up the ladder.