Throughout their careers, employees will need information about salaries for a number of reasons, including negotiating their salary, weighing outside job offers, and deciding between next steps in their career paths. However, because most employers keep salaries secret, employees are left to dig up information on their own — a task that often proves fairly challenging.
Survey data indicates that most employees do not feel satisfied with their current knowledge of salaries. Another factor keeping employees in the dark is that many are reluctant to discuss pay with their coworkers.
When it comes to salary transparency, one widely held belief is that women have a harder time collecting salary information than men. Take the case of Lilly Ledbetter, who was an employee of Goodyear Tire & Rubber Co. She had worked at the company for 19 years before she found out, through an anonymous note, that male colleagues occupying her same position had been receiving much higher pay. A Supreme Court battle ensued, and Congress eventually passed a landmark piece of legislation, the Lilly Ledbetter Fair Pay Act of 2009.
There is some evidence suggesting that women are less informed about salaries than men. For example, Glassdoor’s salary transparency report revealed that male workers are more likely than female workers to believe they have a good understanding of how people are compensated at their companies. And men as well as women report that men are more likely than women to ask about a coworker’s wage. However, previous research has not tackled a fundamental question: Are female employees truly less informed about salaries, or is this just a stereotype?
We address this question in a recent study. To gain insight into this question, we conducted a field experiment with a sample of 752 employees at a multibillion-dollar bank. This organization, like most companies around the world, does not disclose salary information and even discourages employees from discussing salaries with each other.
The experiment centered around a game: Participants had to guess the average salary among some of their peers (that is, employees with the same position title and in the same unit). Employees’ guesses were then compared with the bank’s salary records. If they were accurate, they would earn a reward.