Secret salaries hurt worker performance

If salaries in your workplace are secret, there's more at stake than the frustration of thinking coworkers who produce less than you might be getting paid more. Research by Elena Belogolovsky, assistant professor of human resource studies in the ILR School, indicates that pay secrecy might also hurt your work performance and prompt top talent to look for new jobs. In a paper published online in January by the Academy of Management Journal, she and Tel Aviv University Professor Peter Bamberger '82, M.S. '84, Ph.D. '90, explain why a lack of transparency about pay hurts an individual's performance. When the payroll is private - causing uncertainty about what workers think the pay range might be - it weakens employees' perception that a performance increase will be accompanied by a pay increase, they write. Workers also see pay secrecy as a method of managerial opportunism or deception, according to the research, "Signaling in Secret: Pay for Performance and the Incentive and Sorting Effects of Pay Secrecy." Belogolovsky and Bamberger gleaned their findings from experiments with 280 Israeli undergraduates. All were paid a base salary of $5.70 an hour to play a computer matching game.