Revealing Salaries Can Encourage Lower-Paid Employees To Cheat

Wikier/FlickrIf you make less than your coworkers - and you know it - you'll be more likely to cheat to get ahead, according to a new study published by Harvard Business School.

The researchers say, in most cases, people who have higher, performance-based pay rates cheat more often than those who make less across a diverse set of unethical activities with high payoffs, such as insider trading and bad mortgage practices.

They are used to high-risk, high-reward payoffs.

But this is only the case when the wages are kept a secret. Once salary discrepancies become public knowledge due to workplace gossip or public postings of salaries, the researchers say lower-paid employees end up cheating more.

The pay knowledge may "produce the impression that cheating is economically necessary for survival," according to the study, "Cheating More For Less," published in the journal of Organizational Behavior and Human Decision Processes.

In one of the experiments, researchers gave participants a test and asked them to grade themselves on it. They were then instructed to report their grade and throw away the quiz booklet. To determine whether participants were honest, researchers later fished the participants' quizzes out of the trash and compared them to the self-reported scores.

One of the authors of the study, Scott Rick, a professor at the University of Michigan, writes in Psychology Today that in order "to (gently) encourage cheating," the researchers used questions where the correct answer was not obvious, "in which people could convince themselves that they deserve credit for incorrect responses." When the pay inequality was revealed, employees earning less were more likely to cheat. The opposite effect took place when pay inequality was kept a secret.

Although compensation has long been a taboo topic in the workplace, the transparent technological age has changed the way many workers feel about disclosing salaries. In recent years, some companies such as Namasté Solar, a company that installs solar panels based in Boulder, Colo., has chosen to disclose everyone's salary package in order to explain why one person is paid more than another.

"Usually, salary is an emotional and sticky situation," Blake Jones, co-founder of Namaste, tells Business Insider. "In the end, people actually waste more time and energy wondering how much Bob or Jill is making and thinking the worst."

The jury is still out on whether companies should reveal salaries. On the one hand,

being transparent may encourage fair pay practices. On the other hand, it may cause people on the lower end of the pay scale to feel that they aren't being valued by their employer - and, apparently, to cheat their way to bigger paychecks.