In today’s workplace, the trend toward pay transparency is on the rise. Many companies are making employee salaries public knowledge, believing this openness will lead to greater fairness and equality. But what happens when workers know their colleagues’ pay? A new study surprisingly suggests that knowing someone makes more than you might actually encourage more teamwork rather than resentment.
Researchers from Cornell University have found that when given the choice, people tend to prefer working with higher-paid peers over those who earn less. This preference persists even when the potential collaborators have similar skills and experience. The findings, published in the journal American Psychologist, challenge long-held assumptions about how salary differences affect workplace dynamics.
The study’s authors, Kevin Kniffin, and Angus Hildreth, conducted four experiments to explore how knowing there’s a pay gap influences people’s choices in teaming up with co-workers. Their research comes at a time when both pay transparency and self-selected teaming – where employees have more freedom to choose their office teammates – are becoming increasingly common in organizations.
“I’ve long been interested in the ways in which slight — and not-so-slight — differences in salaries can generate strong reactions from people,” says Kniffin, an assistant professor at Cornell and co-author of the study, in a statement. “When combined with the trend toward more pay transparency in organizations, whether required by law or crowdsourced by employees, and the trend toward more teamwork and collaboration in work, it’s increasingly valuable to understand more about how people think about pay differences between co-workers and potential collaborators.”
In one experiment, 189 doctoral students in economics participated in an auction-style task. They were asked to bid on review work and then choose whether they’d prefer to work with a peer who was paid 10% more or 10% less than themselves. Surprisingly, 65% of participants opted to work with the higher-paid peer.
The researchers then replicated these findings with a broader sample of 171 working adults from various occupations. Participants were presented with a scenario where they had to choose between two projects, each involving collaboration with either a higher-paid or lower-paid coworker. Again, a significant majority (73%) chose to work with a higher-paid colleague.
Why would people prefer working with someone who earns more than them?
The researchers suggest it’s because we tend to view higher pay as a signal of greater competence. In other words, we assume that if someone is paid more, they must be more skilled or knowledgeable.
This assumption held true even when participants had prior experience working with their potential collaborators. In a third experiment involving 287 participants, the preference for higher-paid teammates persisted regardless of whether people had worked with them before or not.
However, the study also revealed an important nuance. When participants were explicitly told that their potential collaborators had the same knowledge, skills, abilities, and experience (KSAE), the preference for higher-paid peers significantly diminished. This suggests that the assumption of greater competence is what drives the preference, rather than the higher pay itself.
“People seem to assume that higher pay is merited and reflects greater competence,” says Hildreth. “And they seem to assume that collaborating with someone with higher pay will be beneficial — in other words, that the higher-paid coworker will share some of their greater knowledge and skills with them.”
Interestingly, this preference for “partnering up” doesn’t extend to hiring decisions. In a fourth experiment, the researchers found that when it came to selecting subordinates, people actually preferred candidates with lower salary histories. This indicates that while we may want to work alongside higher-paid peers, we’re less keen on hiring them as our subordinates.
These findings have important implications for how organizations manage pay transparency and team formation. While companies might worry that visible pay disparities could create tension and discourage collaboration, this research suggests the opposite might be true. Employees may actually seek out higher-paid colleagues, viewing them as valuable resources for learning and growth.
However, the study also highlights potential pitfalls. If left unchecked, this preference could exacerbate existing inequalities in the workplace. For instance, if higher pay is correlated with other forms of bias (such as gender or racial disparities), the tendency to team up with higher-paid colleagues could further disadvantage already marginalized groups.
So, the next time you’re eyeing that corner office, remember: your coworkers might be eyeing you right back – as their next collaborative cash cow. In the new workplace economy, it pays to pay attention to who’s paying attention to your paycheck.
Paper Summary
Methodology
The researchers conducted four preregistered studies using different methodologies. Study 1 used an auction design where doctoral students bid on real work and made teaming decisions. Study 2 presented working adults with hypothetical scenarios about choosing project partners.
Study 3 asked participants to consider actual coworkers they knew. Study 4 focused on hiring decisions rather than peer collaboration. In each study, participants were asked to choose between higher-paid and lower-paid potential collaborators or subordinates, both before and after being given information about their knowledge, skills, abilities, and experience (KSAE).
Key Results
Across the first three studies, participants consistently showed a preference for collaborating with higher-paid peers when KSAE information was not provided. This preference diminished significantly when participants were told that KSAE was similar between potential collaborators. In Study 4, focusing on hiring decisions, participants showed a preference for lower-paid candidates when selecting subordinates. The results were consistent across different sample populations and methodologies.
Study Limitations
The study primarily used hypothetical scenarios and self-reported preferences, which may only partially reflect real-world behavior. While diverse, the samples may not fully represent all workplace contexts. The research also didn’t explore the long-term effects of these preferences on team performance or individual career outcomes. The study didn’t extensively examine how individual differences or organizational factors might moderate these preferences.
Discussion & Takeaways
The study challenges existing theories that suggest visible pay disparities would discourage collaboration with higher-paid peers. Instead, it reveals that people often view higher pay as a signal of competence and seek to collaborate with higher-paid colleagues, possibly to gain knowledge or advance their own careers. This finding has implications for how organizations manage pay transparency and team formation.
However, it also raises concerns about potentially exacerbating workplace inequalities if left unchecked. The research suggests that organizations should consider how pay information influences collaboration dynamics and may need to provide additional context about employee competencies to prevent unwarranted assumptions based solely on pay.
Funding & Disclosures
The authors reported no conflicts of interest. They acknowledged feedback from participants in the 2020 International Association for Conflict Management conference and 2022 Academy of Management Annual Meeting, as well as helpful communications with several named individuals and seminar participants at Cornell University. The research data, analytics code, and materials have been made publicly available on the Open Science Framework.