Pay Transparency Can Push Reward Inequities Under the Table

Successful Entrepreneurs Leverage Knowledge and Motivation

By Daniel Butcher

Successful entrepreneurs focus on what they know best and care most about when brainstorming and evaluating business ideas, according to Academy of Management Scholar Dean Shepherd of the University of Notre Dame.

“Entrepreneurs often say, ‘Where do I look for an opportunity?’ Now, I always try and say, ‘We’ll look internally first at your own history,’” Shepherd said. “‘What is unique about you? What unique knowledge do you have?’

“My path is unique, just like every person’s path is unique, and it’s given me knowledge that other people don’t have,” he said. “If I can think about things from that perspective, then I’m more likely to come up with an opportunity that other people haven’t thought of in the past.

“In thinking about it that way, I’m more likely to see opportunities related to my motivation, something that I’m passionate about, and so opportunities are often identified at the intersection of my knowledge and my motivation.”

People who are knowledgeable in a particular field are better equipped to spot signals of potential opportunities in that area. Experienced entrepreneurs can also gauge the chances of success of a particular idea, even if it’s just a rough estimate, to decide whether it’s worth pursuing.

“If I’m highly motivated by certain things, then I’m more likely to see signals in the environment that relate to that motivation, and so it’s the combination of those two that allows me to identify opportunities,” Shepherd said. “I also evaluate opportunities in a similar way.

“I say to myself, ‘Do I have the knowledge, the skills, and the ability to be able to execute this opportunity? Is it feasible?’” he said. “And I also asked myself, ‘Is it desirable? Is it something that I want to do? If I do it and exploit this opportunity, does it give me the things that I want to have?

“And so it’s really that intersection of knowledge and motivation that is the how do we identify opportunities, and also whether we want to exploit those opportunities or not and what would be required to do so.”

Entrepreneurial Success Requires Luck as Well as Hard Work

By Daniel Butcher

There’s a dirty little secret about what separates successful entrepreneurs from those who fail: Many of the winners have luck on their side, and many of the failures work just as hard but don’t succeed through no fault of their own, according to Academy of Management Scholar Dean Shepherd of the University of Notre Dame.

Shepherd said that stories of entrepreneurs who have failed quite a bit are common. There’s often a disconnect between how investors and other entrepreneurs view them and how they are portrayed in the media.

“You sometimes see it in Silicon Valley, where they say, ‘I’ll only invest in in entrepreneurs who have failed before, because it means that they’ve learned and they know to make tough decisions,’ whereas you see press reports in other parts of the world, or even other parts of America, where they really penalize an entrepreneur who’s failed, despite the fact that they tried their best,” Shepherd said.

“They lost their own wealth, but the media ridicule people who have failed,” he said. “I see that in the press sometimes, where they attribute success to the person’s skills and experience, but then when someone fails, they say that there’s something fundamentally wrong with that person, and the press has an anti-failure bias, which doesn’t help.”

Luck be a lady

Unsuccessful entrepreneurs may have had to deal with a challenging external environment or competitive landscape or face any number of variables beyond their control—regardless of their skills, experience, and effort.

“They could have done everything right and then had bad luck, and the other person could have done everything wrong, and just by luck, they ended up being in the right place at the right time, and they were successful,” Shepherd said. “In either case, you don’t actually learn much from those instances, because luck played such a large role, but then they’ll attribute the person who was successful to their decisions and actions, even though it wasn’t the case, and they’ll attribute failure to the person’s decisions and actions, but it wasn’t the case.

“And so it’s really like a form of superstitious learning,” he said. “We’re learning something, but actually not gaining any knowledge from it. We’re learning something that’s wrong.”

Election Loss Lessons for Democrats

By Daniel Butcher

Leading up to the 2024 U.S. election, Democratic candidates needed to do a better job of keeping their fingers on the pulse of American voters and taking their concerns about jobs and the high cost of living seriously, rather than insisting on painting a rosy picture of the economy, according to Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville.

Pollock noted a disconnect between Democratic politicians’ messages and what swing voters wanted to hear.

“People are saying, ‘I’m upset about this. This is what I see in my daily life,’ and Democrats talked at a more general, abstract level, saying, ‘It’s really not that bad because of this, that, and the other thing,’ and voters think, ‘Yeah, that’s nice, but that’s not my reality,’” Pollock said. “And so if you really want to influence somebody, especially when they’re having a really strong, visceral, negative emotional response, you have to try to understand where they’re coming from, acknowledge their pain, and talk about where they’re at.

“Even if you can’t come up with a perfect solution or what you’re proposing isn’t going to really be feasible, people are going to feel better if they think they’re acknowledged and recognized,” he said. “That’s similar to what we founding the research studywe did about social-media influencers, who are effective at talking about people, saying ‘you’ not ‘me,’using language that conveys an understanding of where their audience is coming from, and talking to them about their issues—that’s what people want.

“They want to they want to feel seen and heard.”

Media Magnify Scandals of Big-Name Companies

By Daniel Butcher

Companies that dominate their industries also have to deal with increased scrutiny. Any negative news, from layoffs and unethical conduct to data breaches, get amplified and can easily become scandals, according to Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville.

Media attention is drawn by the accused or guilty party’s prestige, he said.

“If the perpetrator is high-reputation, they may get the benefit of the doubt for less severe misconduct as some kind of one-off thing, and the media may be less likely to cover it,” Pollock said. “But if the misconduct is severe, then the media is even more likely to scandalize the high-reputation firm’s misconduct, because we don’t expect that from high-reputation firms; it violates our expectations.

“When we have high expectations about a firm’s behavior, whether because we expect them to be more competent or act with more integrity, it’s a bigger deal and more disturbing when they violate that expectation,” he said. “That makes the incident more newsworthy to the media, increasing their coverage of the misconduct.

“These are sorts of things that we’re looking at and trying to understand: What are misconduct aspects and firm characteristics lead the misconduct to become a scandal?”

Pollock and colleagues compared the reactions to data breaches at two different companies of vastly different levels of prestige and name recognition: Facebook and Chegg, a U.S. education technology company that provides homework help, textbooks, online tutoring, and other student services.

“Facebook had a data breach of 50 million accounts; it was covered widely in the media and got lots of attention—thousands of articles were written about their data breach and the problems with it,” Pollock said. “And literally on the same day, Chegg, which is an academic software company, had a similar data breach—40 million accounts were breached, but it was barely covered outside of the the specialist media on data security, and a little bit in the in the education sector.

“So why Facebook and not Chegg? Facebook is better known,” he said. “More people use Facebook and have given them their data, so the expectancy violation is greater and possibly more personal.

“Journalists recognize this, and thus are more likely to scandalize the incident, because it attracts more readers.”

The Disconnect Between Leaders and Patients on Healthcare

By Daniel Butcher

Many people hurt by the high costs and insurance denials plaguing the U.S. healthcare industry might have been hoping that the response to the December 2024 killing of UnitedHealthcare CEO Brian Thompson would lead to reforms. However, most industry executives have tried to go back to business as usual, except with heightened security for senior executives, according to Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville.

In response to the waves of criticism directed at U.S. health insurance and benefits-administration executives in the wake of Thompson’s killing, most industry leaders followed a typical crisis-management playbook, including a predictable public-relations script, he said.

“They’ve been saying all the things that they always say: that they’re beholden to achieving financial goals and medical providers’ increasing costs—‘medical costs go up, and so the insurance premiums have to go up’—and that they’re doing their best to provide coverage, and all these sorts of things, the usual platitudes that they roll out,” Pollock said. “But in terms of actually making some substantive changes, they don’t do much.”

“We’re one of the only countries in the world where healthcare coverage is privatized, and we’ve got the most expensive healthcare in the world with the 44th-best health outcomes,” he said. “It’s hard to justify the status quo on any rational basis.

“So if they want to repair and protect their reputation with customers and avoid this kind of backlash in the future, they have to understand where the customer is coming from and then find ways to speak to those problems and offer up a set of policies or practices they’re going to engage in—changes they’re going to make—to make this easier and better for customers.”

Health industry executives who try to defend the status quo of the U.S. healthcare system come off as tone-deaf at best, and uncaring or willfully dismissive of people’s suffering at worst.

“One of the mistakes that a lot of CEOs make is they try to defend the status quo, instead of saying, ‘You’re right; we’re not doing what we should be doing,’ and then, ‘Here’s what we’re going to do to make it to make it better,’” Pollock said. “There’s a whole other set of issues related to whether or not these things get implemented, but at least symbolically acknowledging their pain, their anger, taking some responsibility for it, and then saying, ‘We’re going to make changes that will address these problems and make things better going forward’ counts for something.

“But if they come out and talk about profitability, that their responsibility is to shareholders, or that this isn’t really a problem, or try to downplay the challenges that people have with high costs, denials of coverage, and administrative burdens, there’s a disconnect from patients’ experiences,” he said. “This is the issue you run into when leaders and customers are coming at a problem from opposite sides or completely different perspectives.”

Why Many Leaders Ignore Criticism

By Daniel Butcher

In the wake of the U.S. public’s reaction to the killing of UnitedHealthcare CEO Brian Thompson and the arrest of suspect Luigi Mangione, some CEOs in the health insurance industry downplayed the tragedy, rather than thinking about the root cause of people’s anger directed toward them.

Keeping blinders on is a red flag for narcissism, according to Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville. He and Arijit Chatterjee of ESSEC Business School researched narcissistic CEOs and found that the more narcissistic the executives are, the more likely they are to ignore critical messages, and surround themselves with yes-men.

“Many CEOs, especially narcissistic ones, surround themselves with people who say, ‘No, don’t listen to the critics. You’re great. You’ve done nothing wrong. Everything’s wonderful,’ as opposed to saying, ‘Hey, we’ve got a real problem that we need to fundamentally think through and deal with,” Pollock said. “So there’s nobody to rein in CEOs when they’re making bad decisions or alert them to a blind spot that they have.

“We all have good ideas and bad ideas, but leaders need people to tell them when they have a bad idea and to stop them from from acting on it,” he said. “When you don’t have those people in place telling the CEO to tap the brakes, the bad ideas just spread, and a narcissistic CEO doesn’t want to hear the negative stuff, whereas a less narcissistic CEO who really wants todo the best job possible will actually cultivate that and make sure they have people around them who will tell them the truth, even if it’s something that they don’t really want to hear, but that they need to hear.

“But a narcissistic CEO will fire truthsayers; they’ll get rid of people who they perceive as disloyal for telling them negative stuff or telling them that they’re wrong.”

Reactions to CEO’s Killing Illustrate U.S. Health Insurers’ Bad Rep

By Daniel Butcher

The killing of UnitedHealthcare CEO Brian Thompson in New York in December 2024 exposed Americans’ intense frustration and deep-seated anger at the U.S. healthcare system. They’re forced to pay more and more for health insurance every year, while dealing with administrative burdens and denials of doctor-recommended procedures, medications, and other medical services.

Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville said that people’s reactions to Thompson’s killing point to the horrible reputation that the U.S. health insurance industry has with the general public.

“Almost anyone in the U.S. you talk to about health insurance has complaints—I’m sure you could probably recount your own healthcare or health insurance war story, when something got declined, or you had problems getting treatment or getting [a procedure or medication] paid for,” Pollock said. “It happens to everybody in the U.S., and in some cases it can be pretty devastating, resulting in bankruptcy and losing all your assets when you have to absorb the costs when coverage is denied for a medical emergency or an expensive medical treatment.

“So there’s a lot of anger around how our healthcare system has been working or failing to work for for people, and it creates this pent-up anger in the [American] populace,” he said. “And so, aside from leading one person who was clearly having additional issues to go out and kill the CEO of UnitedHealthcare, you see the public respond by putting up these social-media posts, like ‘Request for thoughts and prayers denied’ and ‘You failed to get prior approval for having an object removed from your chest, so therefore, it will not be covered’—that kind of stuff, and making the shooter almost a folk hero in certain quarters.

“These kinds of posts that people are putting out there and many others cheering them on speaks to the anger that folks have.”

Merriam-Webster defines infamy as an “evil reputation brought about by something grossly criminal, shocking, or brutal.” Some health insurance leaders have looked themselves in the mirror and wondered what they could do differently, while others have denied responsibility for people’s suffering, both physical and financial.

“We talk about celebrity a lot, which is tied to people’s positive emotional reactions,” Pollock said. “But there’s another kind of emotional reaction called infamy, which is a bad reputation associated with people’s negative emotional reactions that are highly visible.

“A lot of these industries have become infamous, and as the face of the companies, the CEOs will take the brunt of people’s ire.”

Finding Someone to Blame for U.S. Health Insurance Woes

By Daniel Butcher

As Americans pay more and more for health insurance every year, with paperwork burdens and denials of doctor-recommended procedures, medications, and other medical services, their anger and frustration at the U.S. healthcare system continues to simmer.

Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville said that it’s difficult to go after a big, faceless $500 billion corporation, so people blame their suffering on the industry’s corporate leaders. Public discourse in the wake of UnitedHealthcare CEO Brian Thompson’s killing in December 2024 is case in point.

“The CEO is somebody that they can vent their anger on and becomes a target,” Pollock. “So I wasn’t surprised at the nature of the reaction to Thompson’s killing and the apprehension of suspect Luigi Mangione.

“I would hope that the health-insurance and benefits-administration CEOs are listening and paying attention to people’s reactions,” he said. “If they’ve been so insulated from the reality of what their companies have been doing and how it’s affecting people, hopefully this wakes them up.

“But I’m not sure, because it seems like a lot of what they’re doing is beefing up security and taking down information about boards of directors and about senior executives from their websites, as opposed to understanding where this anger is coming from.”

Pollock suggested that senior executives in the health insurance industry should look themselves in the mirror and ask: Why are they infamous? Why are these negative emotional reactions to Thompson’s killing and Mangione’s arrest so widespread?

“It’s an unfortunate extreme outcome, but it illustrates how many people are feeling about the U.S. healthcare system,” Pollock said. “There may be some CEOs who actually say, ‘Oh, my God, we really need to change what we’re doing,’ but there are a lot who are going to rationalize it, and they’re going to have their inner circles tell them, ‘It’s nothing that we’re doing wrong—it’s a crazy person who just went nuts.’

“They’ll try to downplay or rationalize away what happened, as opposed to open themselves up to thinking about the root cause of people’s anger directed towards them and their role in it,” he said.

How CEOs Can Help Fix U.S. Health Insurance

By Daniel Butcher

In the aftermath of the killing of UnitedHealthcare CEO Brian Thompson and the arrest of suspect Luigi Mangione in December 2024, it’s crystal clear that many people are deeply dissatisfied with the U.S. health insurance industry. With no realistic hope for legislative reform on the horizon, though, the onus is on employers to ease the administrative burden on employees and go to bat for them when health insurers or third-party administrators (TPAs) deny coverage of their doctor-recommended procedures, medications, and other medical services.

Academy of Management Scholar Tim Pollock of the University of Tennessee, Knoxville said that whenever he’s spoken to people who work in human resources (HR) about this issue, they often say that they don’t have sufficient staff members to handle benefits-administration oversight. In that case, it’s up to C-suite executives to come up with a solution for proper oversight of insurers and TPAs.

“HR people often say that’s the responsibility of the insurance companies, and many organizations outsource benefits administration,” Pollock said.

“Part of what they should be doing, though, is tracking this stuff and saying, ‘Okay, are we getting what we’re paying for?’ because things like health-insurance costs and benefits are hugely important to their employees, but they’re treated as a fringe benefit by the company,” he said.

“It isn’t a primary focus for CEOs—they don’t consider it to be part of what they need to be doing, but that would be a great thing for them to do.”

A coordinated effort to prioritize oversight of health insurance and benefits administration among senior executives at U.S. companies could help employees’ well-being and healthcare outcomes.

“Even a Walmart or some other company that employs millions of people, they’re one company in the face of a huge [healthcare] industry, but if you had a bunch of CEOs of big companies band together and say, ‘This is not adequate. This is not sufficient. We aren’t happy with the services that we’re being provided,’ and they make it public, that could bring about change,” Pollock said.

“Going public has to be a big part of it; that’s going to help bring pressure to bear on health insurers and TPAs, because one of the challenges they face is the U.S. insurance company playbook as well, which says, ‘Okay, fine, then go work with somebody else,’” he said.

“But they’re all doing the same stuff, so employers don’t really have an alternative, and it’s to the extent that either somebody can come along and provide a different kind of service, which is going to be very hard, or employers are going to have to try to find ways to put pressure on insurers and TPAs collectively, publicly, building on the emotional reaction that people in the U.S. have had to high healthcare costs, administrative burdens, and frequent denials of medical services.”

Three Types of Pay Transparency Are Changing the Game

By Daniel Butcher

While there isn’t a nationwide pay-transparency law in the United States—at least not yet—10 states, several cities, and even one county (Westchester, New York) have such regulations. That means organizations may need to adjust how they communicate about pay depending on where they’re based and where they operate.

Academy of Management Scholar Peter Bamberger of Tel Aviv University said one type of transparency is letting employees freely talk about their pay with one another. That’s been protected by U.S. federal law since the passage of the National Labor Relations Act (NLRA) in 1935.

“Most employees don’t know that they have the right to talk about their pay with other employees—that’s part of the NLRA. Still, companies discourage it, and in fact, some companies go too far in discouraging it so that they’re actually breaking the law,” Bamberger said.

“There’s very little merit to stopping employee disclosure, particularly since we now have things like Glassdoor, which really make it easy for employees to find out what others are earning in return for disclosing their own compensation,” he said.

In the second type of pay transparency, employers disclose compensation ranges to current and prospective employees.

“Laws in more than a dozen U.S. states and several cities are pushing for some degree of partial transparency with mandatory employer disclosure of pay ranges,” Bamberger said.“Going beyond that, where it’s not ranges that employers show, but rather actual individual rates of pay, can be potentially risky.

“Our studies have found that letting employees see how much coworkers make tends to have some pretty detrimental effects, whether it comes to malicious envy or even counterproductive work behavior,” he said. “The comp ranges not so much, but revealing detail about how much specific individuals are making can be problematic, so you have to be very careful about how you go about doing it.

“There are some success stories that I’ve written about in a book that I wrote about pay transparency, but it can be problematic.”

The third type is procedural pay transparency, from which Bamberger and his research colleagues have found only positive outcomes.

“That is being open and transparent about every aspect of the pay system in your organization, telling employees about the basis of the compensation structure, for example, what are the criteria for increasing bonuses? How were bonuses calculated this past year? How are differential pay rates by levels in the organization determined?” Bamberger said.

“Most employees don’t have a clue as to what their benefits are or how compensation levels are determined in the organization—employee pay knowledge is really minimal,” he said.

“Where organizations enhance this procedural pay transparency, perceptions of justice and fairness increased dramatically, and that has a wide range of beneficial effects and implications on retention, social exchange and reciprocity among coworkers, and giving back to the organization.”