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“At the individual level, pay secrecy can have a deleterious effect on employee motivation, task performance and retention,” said Elena Gitter, an assistant professor at Cornell University’s School of Industrial and Labor Relations. Together with Peter Bamberger of Tel Aviv University, Gitter recently conducted a study that found a link between employee collaboration and pay transparency that suggested employees work together more effectively when pay is transparent. Specifically, the two researchers discovered that workers are better at asking for help from the right people when they know how much those people earn.
Gitter and Bamberger asked their study subjects to complete a series of anagram puzzles in exchange for cash prizes, explaining that each person would be assigned to a virtual team that included three other teammates. They would earn cash for each round, but their earnings would depend on their individual performance compared to their teammates, as well as how well they worked with those teammates. What the participants didn’t know is that the other three players on the team were actually in cahoots with the researchers as part of the experiment — during the task, subjects were allowed to email their teammates for help, but the answers they received were pre-scripted.
