Sharing employee pay can unexpectedly influence workplace dynamics and feelings of entitlement among co-workers, according to a study published April 3 in the Journal of Business Ethics.
When workers learn where their pay ranks against their peers, their feelings of entitlement can rise or fall based on whether they’re near the top of performance ranking lists, the researchers found.
“Organizations should carefully consider the type of information shared with employees, as the appropriateness of this information may depend on the employees’ relative performance,” lead author Boris Maciejovsky, associate professor of management at the University of California at Riverside, said in a statement.
Across four experiments, employees with top performance rankings tended to feel entitled to significantly higher compensation than those ranked below them, even when comparing themselves to peers with similar rankings. They were also more likely to demand significant raises.
On the other hand, employees with low-level performance rankings felt demoralized and were less likely to ask for a raise. Some workers felt they didn’t deserve a raise at all, and because of that, had less incentive to improve their work or collaborate with others.
The study findings may hold important implications as companies, cities and states adopt transparency policies, Maciejovsky said. Although transparency aims to promote fairness and reduce inequities, it can also reinforce status differences between high and low performers, he added.
Maciejovsky and colleagues emphasized that pay transparency still has value, as it can uncover unfair disparities and reduce systemic biases. To combat the unintended consequences, though, employers should invest in a supportive workplace culture that “values growth and contribution across all levels — not just those near the top,” they said.
Only 19% of U.S. companies have a pay transparency strategy in place, according to a Mercer survey. However, 63% of companies said they planned to share pay information internally and externally, and 56% said employees should have access to compensation data.
In general, 3 in 4 employers aren’t prepared for pay transparency laws to take place in 2025 and 2026, according to a survey by Aon plc. Companies that comply with new regulations “sooner rather than later” will be better able to tackle pay disparities, encourage fairness and help workers make informed career choices, an Aon executive said.
