Recent research from Cornell University reveals that pay transparency does not negatively impact collaboration. However, the study also found that employers tended to prefer candidates with a lower salary history compared to their own during the hiring process.

Since 2018, around half of the states in the U.S., including New York, have either implemented or are considering laws related to pay transparency. Previous studies have raised concerns that visible salary differences might negatively affect teamwork, mainly when a significant gap exists between co-workers’ salaries.

Kevin Kniffin, assistant professor and co-author of the study, challenges this assumption. According to his research, individuals tend to prefer working with higher-paid colleagues, but only if those colleagues are perceived to have superior skills from which they can learn.

“There was an expectation that individuals might want to earn more than their teammates, but our findings suggest the opposite,” Kniffin explained. Alongside him, Angus Hildreth, assistant professor of management and organizations, co-authored the study.

Kniffin asked, “Why do people seem to prefer working with teammates who earn more?” He answered that the main reason appears to be the anticipation of learning from the co-worker and ultimately benefiting personally from that relationship.

“It’s like saying, ‘I’m ready to join a group or enter into a collaboration and sacrifice a bit of my self-esteem, maybe even my status, in order to potentially gain something valuable for my future,’” Hildreth elaborated.

The theory was further tested in a different collaborative scenario: hiring. In this setup, participants with hiring experience acted as employers choosing between a candidate with a higher salary history than theirs or a lower one. The majority, 71%, chose the candidate with a lower salary history. This preference became even more distinct—rising to 83%—when it was revealed that both candidates possessed similar skill sets.

Kniffin noted, “As both teamwork and pay transparency continue to increase across organizations, our research illuminates some surprising dynamics that people should be prepared for.” This study sheds light on the complexities of pay transparency and its implications for team dynamics and hiring practices.

More information: Kevin Kniffin et al, Partnering Up (and Down): Examining When and Why People Prefer Collaborating With Higher Paid Peers (and Lower Paid Subordinates), American Psychologist. DOI: 10.1037/amp0001397

Journal information: American Psychologist Provided by Cornell University