Why Salaries Should NOT Be Kept Secret

Do you know how much the woman in the next cubicle is paid? How about the guy down the hall who seems to be on an endless coffee break?

Unless you're a manager, chances are you only know what you make--and no one else. And researchers at Cornell University and Tel Aviv University think that's wrong.

Salaries should not be kept a secret. Why? Secret salaries hurt worker performance and increase the turnover of top talent, according to Cornell's Elena Belogolovsky and Tel Aviv's Peter Bamberger.

When the numbers on the payroll are shrouded in secrecy, employees begin to doubt that an increase in personal performance will be accompanied by a pay increase and that can lead to reduced performance and productivity.

In addition, high-performing workers are typically more sensitive than others when they perceive there is no discernible link between performance and pay, suggesting that pay secrecy may hinder a firm's ability to retain top talent.

Belogolovsky and Bamberger found that subtle "signals" in the way human resources policies are communicated and put into practice can influence employees' perception of workplace uncertainty and inequity, leading to poorer performance and higher turnover.

The study findings were published in the Academy of Management Journal.

--From the Editors at Netscape

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