Professional Documents
Culture Documents
Any parent can tell you that a surefire way to turn joy into rage is to offer your child a big candy barand then turn around and offer an even bigger one to his sister. Suddenly, a special treat turns into a great injustice. "Hey! How come she got more? That's not fair!" And any hiring manager can tell you that the world of business is not so different.
"It really was all about the recognition of and comparison with their peers, and many of them were willing to pay for it."
"This is why MBA programs send out lists of average salaries, and why students spend hours poring over those lists," says Ian Larkin, an assistant professor in the Negotiation, Organizations & Markets Unit at Harvard Business School. "You should see the angry e-mails I get from students when they find out that a job offer turns out to be $10,000 per year below the average. It's not that they really feel like an annual salary offer of $115,000 is unfair on its own. They might be perfectly happy with
Insecurity dishonesty
leads
to
Social comparison also can lead to insecurity-driven cheating, as Larkin details in a 2009 paper co-written with HBS colleague Benjamin Edelman, Demographics, Career Concerns or Social Comparison: Who Games SSRN Download Counts? The paper addresses an issue near and dear to academics worldwide: the relative popularity of working papers in the Social Science Research Network (SSRN) repository. The SSRN is a huge academic paper repository, with more than 100,000 authors and 500,000 registered users who have the opportunity to view or download every paper on the site. For each paper, SSRN creates a web page that includes statistics on how many times the paper has been downloaded and viewed. The SSRN site also publishes various "top 10"
lists in numerous fields, ranked according to how many times the paper has been viewed, downloaded, or cited elsewhere on SSRN. Some scholars paid a lot of attention to the reported download counts of their papers; Larkin reports that one prominent legal academic described the monitoring of his own paper's download counts as "like crack for me." Historically, SSRN allowed unlimited downloads of papers, and most of those downloads were reflected in the reported download count on each paper's web page. It became apparent that many authors were gaming the download count system by repeatedly downloading their own papers, so that others would see the high download count and assume that these particular papers were very popular. SSRN maintains detailed historical records of every paper download and is able to determine when papers appear to be downloaded over and over by the same person. "It's like having a convenience store that's not manned, and everyone who comes in can either steal or pay, but there's a video camera that nobody knows about, and it's tracking everyone's every move," Larkin says. "For years, some academics got away with inflating their own download count numbers, but we were able to see exactly who was doing this, and in what circumstances." In their research, Larkin and Edelman teamed up with the SSRN and set out to determine the factors that would make academics inflate the download counts of their own papers. "As economists, we thought, hmmm, it's probably people who are up for tenure soon, or maybe it's the people who just graduated, and they want to get their name out there," Larkin says. "We were thinking very much along the traditional economic model--people doing things for rational, career-promoting reasons." Larkin shared these hypotheses with HBS colleague and mentor Max Bazerman, a leading
ethics scholar, who had a different theory. "Max told me, 'I'll bet people are doing this because they feel bad that their papers aren't being downloaded as much as their colleagues' papers,' " Larkin says. "So we looked at that." It turned out Bazerman was right. The researchers found that authors were more likely to download their own papers repeatedly when a colleague's paper was performing especially well on the site, or when a very similar paper to an author's was newly released and received significant downloads. Deceptive downloads also increased during times when a paper was close to gaining (or losing) placement on a top 10 list. (Ironically, one of the most downloaded SSRN papers of all time is 'I've Got Nothing to Hide' and Other Misunderstandings of Privacy.) "Again, what was surprising to us was how little we found in terms of the economic reasons for doing this," Larkin says. "By far, the biggest predictor of this behavior was fear of being socially inferior to one's peers." (Those tempted to boost a paper's usage stats should note that SSRN's terms of service now state that the attempted manipulation of download counts is against site rules, and that the organization retains the right to ban anyone caught abusing the system.)
performance is actually an inefficient strategy; it can lead to resentment or even sabotage on the part of employees who believe they are underpaid compared with their colleagues. Thus, a standardized salary scale, combined with ancillary incentive programs, may be the best way to motivate employees. "When deciding how much effort to exude, workers not only respond to their own compensation, but also respond to pay relative to their peers as they socially compare," the paper states. That's important food for thought, considering that Facebook, LinkedIn, and other such sites have made it de rigueur to share information that we used to keep to ourselves. "It used to be that our salaries were very secret, but they're getting less and less secret because of social networking," Larkin says. "And people get upset quickly when they realize that there are large variances in how much other people are paid. Companies need to realize that with the overflow of information these days, paying peers differently is going to affect not only how those people feel but how their colleagues feel as well."
Ramifications managers
for
salary
The field evidence from the worlds of software sales and academia indicates that companies need to bear social comparison in mind when designing compensation plans. Larkin discusses the issue in The Psychological Costs of Pay-for-Performance: Implications for the Strategic Compensation of Employees, a paper he cowrote with HBS colleague Francesca Gino and Washington University's Lamar Pierce. The authors argue that paying each employee solely according to his or her