Pay requests are influenced by how well our peers perform

Knowing the amount your coworkers make is increasingly common. In 2023, the EU issued a directive to encourage organisations to include salary ranges in job postings, while some companies have voluntarily opted to start sharing such information. Websites like Glassdoor, where current or former employees can anonymously share details about a workplace, have also increased the amount of information shared about company pay.

Many argue that this kind of pay transparency reduces inequality. According to a new study in the Journal of Business Ethics, however, there may be some unintended consequences to the practice. There, a team led by Boris Maciejovsky finds that feelings of entitlement or demoralisation around pay can emerge, based on how close to the top or bottom of the workplace hierarchy someone is.

In the first study, 119 working professionals were asked to identify where they thought they stood in their company's pay structure and rated how much they felt they deserved a 10% raise. Here, results showed a negative correlation between perceived pay rank and feelings of deservingness: that is, the lower participants felt they ranked, the less entitled they felt to a raise.

In a follow-up, a further 142 participants were given a fictional scenario in which they were told their workplace performance ranked high, medium, or low, before being asked to name the minimum salary increase they would accept in a new job. And although the colleague's salary offer remained the same in every scenario, salary requests increased in line with performance rank: the higher someone's rank, the more they felt entitled to ask for.

Next, the team recruited 104 college graduates and paid them $1, with the chance to earn a bonus based on performance in a task. Participants were randomly placed into one of four groups that varied in two ways: whether they were told they performed well or poorly on a task, and whether a similarly ranked peer had requested a high or low amount of pay.

After completing a timed number puzzle, participants were told their rank on the task compared to others (which was actually assigned at random), and how much someone else with a similar rank had asked to be paid. Finally, they were asked how much they thought they should be paid for doing the task.

The results showed that both rank and how much their peers had requested influenced participants' how much they thought they should be paid. Interestingly, though, rank only made a big difference when the peer's request was high, suggesting that people compare themselves more when there's more at stake.

The final study looked at the link between compensation requests and feelings of entitlement. Here, 345 participants read two scenarios where they were performance ranked either ahead of or behind a peer, before being asked what percentage salary increase they would ask for in a new role, and how entitled they felt to a 20% raise. Again, participants asked for more money when they had a higher rank and when they were ahead of their peer — and the effect of rank was stronger when they were ahead, suggesting that feeling superior boosts entitlement. In other words, being ranked highly increased people's sense of deservingness, which in turn led to higher pay demands.

It's important to keep in mind that this experiment explored the topic through a series of hypothetical scenarios, and in the real world there are going to be many other complex factors which influence workers' feelings about their performance at work, level of compensation, and willingness to approach employers for adjustments. Further work which perhaps takes a more observational approach may be informative about how influential the above pay transparency practices are in practice.

Overall, however, the study suggests that awareness of one's own performance and one's pay relative to others may spur some workers to request more compensation, while discouraging those lower in the hierarchy from doing so. So, while pay transparency practices at work may seek to promote fairness, it can also "reinforce status differences between high and low performers which impede teamwork and collaboration" according to Maciejovsky. "Transparency is a powerful tool," he shares, "but like any tool, it can have unintended consequences if we don't use it wisely."

Read the paper in full:
Maciejovsky, B., Gunyawee Teekathananont, Chen, P., & Garcia, S. M. (2025). Standard-Based Entitlement: How Relative Performance Disclosure Affects Pay Requests. Journal of Business Ethics. https://doi.org/10.1007/s10551-025-05995-x