People prefer to work with higher-paid colleagues, study finds

Research published by the American Psychological Association reveals that when given the choice, people prefer to collaborate with higher-paid colleagues, but they tend to hire subordinates with a lower pay history than their own. This study, featured in American Psychologist, delves into the impact of increasing pay transparency on workers' behavior.

Kevin Kniffin, PhD, an assistant professor at Cornell University and a co-author of the study, has long been fascinated by the emotional and behavioral responses to salary differences. "I've long been interested in the ways in which slight -- and not-so-slight -- differences in salaries can generate strong reactions from people," Kniffin explains.

He believes that with more companies moving towards pay transparency, it’s important to understand how these differences shape workplace dynamics, particularly as collaboration becomes a staple in many organizations.

Some experts initially speculated that pay transparency might drive resentment among employees, with lower-paid workers potentially avoiding their better-compensated peers. But Kniffin and his fellow researcher, Angus Hildreth, PhD, had a different theory. They suspected that salary differences might instead serve as an indicator of competence, prompting workers to seek out higher-paid colleagues when collaborating.

To investigate, they conducted a series of experiments examining how salary information influences workers’ preferences for collaboration and hiring decisions.

In the first experiment, 171 economics PhD students were presented with a scenario where they could bid on a project and select a partner based on their potential partners' bids. Almost two-thirds (65%) opted to work with the partner who requested a higher salary. This result suggested that, at least initially, salary signals competence and may encourage people to collaborate with higher-paid colleagues.

The second experiment replicated these findings with a broader group of 171 online participants. Initially, 73% of the participants selected a higher-paid colleague when given a choice between a higher or lower-paid collaborator.

However, the researchers added a twist: participants were informed that both colleagues had the same level of knowledge, skills, abilities, and experience. When this factor was introduced, the preference for higher-paid colleagues dropped to 60%. While most participants still gravitated toward the higher-paid partner, the reduced percentage suggests that equal qualifications can balance the perceived value of salary differences.

The third experiment added a layer of realism by asking 375 online participants to choose between real-life colleagues they had worked with in the past. Each participant was tasked with imagining that one of the two colleagues they had worked with before had a higher salary than theirs, while the other had a lower salary.

As in previous experiments, the majority chose the higher-paid colleague, but this time, the preference was narrower: 58% opted for the higher-paid collaborator. The smaller margin indicated that personal experience with colleagues might soften the influence of salary on collaboration preferences.

"People seem to assume that higher pay is merited and reflects greater competence," Hildreth points out. "They seem to believe that collaborating with someone who earns more will be beneficial—perhaps because they think the higher-paid worker will share some of their superior knowledge and skills."

In their final experiment, Kniffin and Hildreth shifted focus to hiring decisions. A group of 138 online participants with hiring experience was asked to choose between two job candidates with the same qualifications. The only difference was the candidates' salary histories: one had earned more in the past, while the other had a lower salary history.

Surprisingly, 71% of participants preferred to hire the candidate with a lower pay history. The researchers suggest this might be linked to the belief that salary should align with organizational rank, with subordinates being paid less than those higher up the ladder.

These findings provide important insights into how pay transparency could reshape workplace collaboration and hiring practices. Kniffin highlights the potential implications, saying, "While companies may anticipate pay transparency would impede employees' willingness to work with higher-paid colleagues, we find evidence that salary disparities can actually function as a magnet for collaboration."

Hildreth adds that more research is needed to explore the real-world effects of these decisions. "I’m intrigued by whether people actually benefit from collaborating with their higher-paid peers and whether higher-paid workers do share their assumed greater skills," he notes.

This study highlights how assumptions about pay and competence can shape workplace dynamics in subtle yet significant ways. As more companies adopt transparent pay practices, understanding these perceptions will become increasingly important. Organizations may find that salary differences do not necessarily breed resentment but may instead drive workers to seek out collaboration with higher-paid colleagues, assuming that they bring valuable skills to the table.

With salary transparency gaining traction in various industries, employees and employers alike will need to reconsider how they view compensation in relation to competence. These insights may also prove useful in understanding broader hiring practices, where lower-paid candidates are often favored to maintain perceived organizational hierarchy.

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