Imagine a scenario when everyone knows everyone’s salary in a company!

From our parents we have heard that salaries are meant to be kept secretive, so much so that parents also don’t tell salaries to their kids. It is obvious that parents would not want their young child to sway away with the zeroes in the salary or understand how much they are struggling if the scenario is otherwise. But for a moment, let us imagine a scenario where everyone in a company gets to know the pay-scale; from the CXOs to co-workers till the interns.

It would certainly be a total chaos. One word to describe the situation is catastrophic. Different people are hired for different purposes in a company and in a team, there are different types of people coming from different walks of life. Some are smart, some a street-smart, some are really hardworking while some are lazy or let’s say not so hard working.

If the best employee gets to know that his/her co-worker is getting the same salary as him/her, they will certainly want to leave the company and look for better opportunities. They are putting such effort inside the company, giving their best and still they are belonging to the same pay-scale as someone who is not (according to them).

The highest paid individual would feel under-paid and again, it wouldn’t be surprising for him to look for another job when his/her salary difference would be too less as compared to others. There would negotiation talks with the executives and employees would talk about the ‘value’ they bring to the company as compared to others!

Women and men would strive for equal pay, it said that women even though it 21st century are paid less than male employees. It is said that in the US, women between the age of 25-34 earn 93 cents as compared to men who earn a dollar for the same job.

The biggest talk that would happen would be between the employees and the executives for the difference and gap in their pay. There is a small story related to this issue –

In the 1993, the federals forced organisations in the US to reveal the salary and pay-scale of the executives. By 1993 it was still undisclosed as to what the executives took home. The major reason behind this was to stop the over-pay to the executives. This would stop the excessive compensation and outrageous salaries.

In a report it was found out that in 1976 the average CEO was paid 36 times as much as the average worker. By 1993, the average CEO was paid 131 times as much. But the opposite happened.

Once salaries became public information, the media regularly ran special stories ranking CEOs by pay. Rather than suppressing the executive perks, the publicity had CEOs in America comparing their pay with that of everyone else.

In response, executives’ salaries skyrocketed. The result? Now the average CEO makes about 369 times as much as the average worker – about three times the salary before executive compensation went public. 

Reason behind the Chaos?

Sometimes money is often compared with happiness. The amount of excess money you make, the more successful, happy and fulfilled you become. But this is a wrong notion from humans. The link between money and happiness is very weak. In fact, countries who have rated very high in the ‘happiness index’ are in fact not the richest in numbers, they do not have the highest GDP with swift businesses.

The reason behind such chaos is envy and comparison. When this element enters into our lives, it leads to chaos. If we see human psychology and relate with behavioural economics, we see that humans tend to value what we have.

Remember the time when you were trying to sell something and the other person gave an amount less than you expected? For example, you decided to sell you old car, you remember all the good time, all the good memories and experiences you had with it and after considering that you put up the price let’s X. Now you go to the seller and he just sees the 10-years old car and puts a value much less than X, because he/she cannot understand from the value that you have earned from it.

Same is with salary, position and the work we do for any organisation, when we see from our perspective, we tend to value more our things as compared to what others have done.

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