Career Posts

Pay Transparency Can Push Reward Inequities Under the Table

By Daniel Butcher

Performance-based pay—including merit-based salary increases and bonuses—can be complicated by pay transparency rules that make the details known to coworkers, according to Academy of Management Scholar Peter Bamberger of Tel Aviv University.

A reaction to that can lead to pay compression—when wages for low-skilled or low-performing workers and wages for high-skilled or high-performing workers move closer together—or an increase in requests for deals with special perks, also called idiosyncratic deals or i-deals. I-deals are non-standard work arrangements that individual employees negotiate to get remote work or flexibility, training opportunities, special assignments, and even performance benchmarks that would trigger bonuses. I-deals are often used to reward high-performing candidates and employees who have specialized skills in the hopes of retaining them long-term.

“You can imagine, if you’re a star performer and your bonus or merit-based raise is lower than it’s been before, you’re likely to think about leaving that organization and going to work somewhere else—and that’s exactly what some economists have found, that where we have pay compression, the star performers actually pick up and leave,” Bamberger said. “I recently published a paper that also shows the same thing, that pay compression very quickly leads to star performers’ departure.”

So what can organizations’ leaders do?

“What we find is that employees don’t necessarily push for more money; they make their requests for other types of rewards, primarily benefits as part of what we call idiosyncratic deals, things like the number of days per week that they can work from home or the number of weeks per year that they can work from Hawaii,” Bamberger said. “There’s a large body of literature on i-deals in management, and they include various types of benefits packages.

“What we find using data from about 120 organizations in China is that where pay is more transparent, the differentials in the pay of higher and lower performers are more compressed,” he said. “Perhaps because such a situation could drive higher performers to look for alternative employment, when pay was more transparent, employers rewarded the higher performers in other, less observable ways using these idiosyncratic deals. If fact, higher performers asked for these types of deals, and in 50% of cases where they ask for it, they got it.

“What’s actually happening is that transparency is shifting the pay differential from where it can be seen, annual raises and bonuses, to those types of rewards where it’s not transparent, that is, idiosyncratic deals.”

Two Factors that Determine Young Professionals’ Drinking Levels

By Daniel Butcher

Early-career professionals often drink as much alcohol as they did in college or even more after graduation, especially if they’re working in a sales role with a boss or mentor who drinks a lot, research shows. But young workers in roles that make them feel empowered and who are surrounded by supportive coworkers who tend to drink alcohol in moderation are more likely to deal with socialization and stress in healthy ways and avoid problem drinking.

That’s according to Academy of Management Scholar Peter Bamberger of Tel Aviv University, who said supportive peer relationships with abstainers or moderate drinkers can be influential, as can jobs that provide a higher level of psychological empowerment.

“A combination of the two—peer support and empowerment—make it so that people aren’t as stressed out by being given roles and tasks that they may not be able to handle, because underlying a lot of what’s involved with this drinking are two main motivations,” Bamberger said. “One is a normative social motivation to go out and drink to become socially integrated in their workplace.

“The second is a stress motivation: ‘This is how I coped with stress in college; I went out to drink, and now I do the same thing at work,’” he said. “One of the critical things that we show in our research studies is that if managers can find alternative ways of coping with stress, actually being proactive in terms of trying to address some of the stressors that newcomers face at work, like uncertainty, they may be able to speed up that maturing out process that can lead to reduced levels of alcohol consumption among early-career professionals.

“Support from peers and psychological empowerment were keys to success in that.”

Binge Drinking Decreases After College, Right? Not So Fast…

By Daniel Butcher

Contrary to popular belief, university students don’t get drinking out of their systems during their college years before entering the workforce. Studies show drinking levels increase after graduation and peak in the mid-20s.

Academy of Management Scholar Peter Bamberger of Tel Aviv University said that especially for some client-facing roles such as sales, on-the-job pressures and social situations often lead to increased alcohol consumption among young professionals.

“The common perception is that people’s drinking is at its highest levels for young adults, at least when they’re in college, and then as soon as they get out of college, they take on employment; they start their career, and their drinking very quickly declines,” Bamberger said. “However, there’s been some indication already for the past 10 years that that may not be the case.

“In fact, the data on young adults shows that, particularly among college students and twenty-somethings, the peak levels of alcohol use and misuse are actually at around ages 25 and 26, and they’re continuously rising after graduation,” he said. “It’s not like people graduate from college and mature out of their drinking—the party continues.”

Bamberger and colleagues have studied different profiles of alcohol drinkers. Their research findings don’t always align with popular narratives about booze consumption.

“We’ve looked at how people drink alcoholic beverages, how frequently and when they drink, and there are certain patterns that are more problematic than others,” Bamberger said. “First of all, where individuals engage in heavy episodic drinking, like binge drinking, and they do it more frequently, and they do it not necessarily only on a weekend but during the week as well, that’s a very risky pattern.

“And then you have more in the middle of the range, moderate traits and patterns, and then you have patterns like only drinking socially or only on special occasions, and you have abstainers, but and most college students do drink—most are not abstainers,” he said.

“We have these three patterns among people who drink, and when we look at the likelihood of people shifting from a really risky pattern of heavy drinking to a more moderate pattern, or from a moderate pattern to light drinking, what we find is that these patterns are in fact rather sticky.”

Young Heavy Drinkers in Non-STEM Jobs Earn More Money

By Daniel Butcher

There is no meaningful correlation between levels of alcohol consumption and compensation among early-career professionals working in roles focused on science, technology, engineering, and mathematics (STEM). But heavy drinking is associated with higher pay for non-STEM professionals who are recent college graduates.

Academy of Management Scholar Peter Bamberger of Tel Aviv University said that he and colleagues have researched levels of alcohol consumption and compensation of STEM professionals versus those working in non-STEM fields.

“We were looking at the link between consumption patterns and income growth in the initial years of employment after graduating from college, and surprisingly, what we found is a positive relationship between drinking and income growth in non-STEM roles,” Bamberger said.

“The findings are actually capturing the dynamic that, if you’re not in a STEM job and you want to move up in the organization, you need to engage in these social practices that often revolve around alcohol, and the more you do that, the higher your growth in income is going to be,” he said.

That finding is—at least in part—tied to the prevalence of non-STEM professionals working in sales, marketing, distribution, customer-service, and business-development roles who routinely partake in adult beverages while meeting with clients and prospects.

“A lot of non-STEM people are engaging in marketing and sales and support in building and maintaining relationships with customers,” Bamberger said. “In STEM roles, they’re working in a lab or in front of a computer terminal coding, so there’s less of a role for alcohol as a basis for increasing your salary—drinking is not going to do a hell of a lot for your career if your role isn’t client-facing, right?

“But early-career non-STEM salespeople who drink on the job with clients may be more likely to get promoted and rewarded financially,” he said. “That was the logic behind the research, and that’s what we actually found.”

However, there’s an obvious caveat. Bamberger noted that recent research shows that daily alcohol intake—even in moderate amounts—increases drinkers’ risk of health issues.

“There have been a couple of studies that have come out recently that that directly contradict the line that’s been pushed a lot by a lot of the alcoholic-beverages companies, which is that having some wine with your meal every day is going to prolong your life—it’s healthy,” Bamberger said.

“You’re best off not drinking any alcohol whatsoever, not so much because of its implications on mental health, but rather largely because of its implications with respect to alcohol as a carcinogen, specifically as a leading cause of esophageal cancer,” he said.

“Many younger employees nowadays recognize the risks in drinking; a lot of young people are actually picking up on those problematic implications of drinking alcohol even at the lowest levels and understanding that health risk.”

Can Performance Be Managed Upward?

By Daniel Butcher

Employees evaluating managers’ performance, not just vice versa, also can benefit organizations.

That’s according to Academy of Management Scholar Herman Aguinis of at the George Washington University School of Business and author of Performance Management for Dummies, who cited Dell Inc., where everyone—from entry-level employees to the top management team—completes an annual employee engagement survey called “Tell Dell” with questions about performance and diversity, equity, and inclusion (DEI). Dell leaders use the survey data to hold personnel—including leaders—accountable.

“Before they get promoted upward, every Dell manager needs to have really good ratings from their subordinates or direct reports, so it’s not just the supervisor evaluating the performance of their employees, but also the employees evaluating the performance of leadership and their supervisors—it goes both ways, upward and downward,” Aguinis said.

An even more extreme experiment in a new way to do performance management is “radical transparency,” which Ray Dalio, founder of hedge fund giant Bridgewater Associates, initiated more than three decades ago. He’d been looking for ways to improve the company’s performance and establish a culture of openness and independent thought. The organization has encouraged employees to review their direct manager or supervisor and even senior executives honestly, even harshly—real-time performance evaluations often deliver “radical truth.”

While Dalio found success with this approach, it’s not for everyone, as it can ruffle feathers and make people uncomfortable. Radical transparency means that leaders—and everyone else at the company—open themselves up to oversight and critiques. They must have thick skin and open minds to listen with humility to the feedback that lower-ranking employees give them and respond to it in ways that are productive, without getting defensive or seeking retribution. They also have to deliver brutally honest feedback to their direct reports in ways that improve their performance and morale rather than discouraging them.

Seven Steps to Improve Staff’s Time-Management Skills

By Daniel Butcher

Academy of Management Scholar Herman Aguinis of the George Washington University School of Business, one of the most influential management researchers, said that performance management—when organizations’ managers and leaders do it properly—is critical for organizations because it drives decisions about who gets a bonus, who gets promoted, who gets demoted, and who gets transferred or cut. He offered the following tips for business leaders to help build “time management-friendly” organizational cultures:

1. Follow through on lessons learned during employee training programs:

“Understand that training programs aimed at building time management skills, such as to-do lists, quiet time, and so forth, are only the first step. Employees need a role and work environment conducive to using these skills. If employees face structures and norms that make them waste time, the skills they learned will be useless and lost if they are not put to use,” Aguinis said.

2. Set a good example for rank-and-file employees and put them in a position to succeed:

“Leadership is critical in creating time structures and norms conducive to good time management. First, leaders need to manage their own time well. For example, running meetings efficiently and not letting people waste time at meetings. Also, leaders need to implement performance management and reward systems that discourage wasting time based on how well people manage their time and the results they obtain. Measure the time management performance of middle management. How many performance and rewards systems measure time management? Not many.”

3. Embrace flexibility and hybrid work schedules

“Use technology to minimize commuting time, allow flexible hours and telecommuting.”

4. Avoid and eliminate recurring meetings that aren’t likely to move the needle:

“Don’t create committees and task forces that study issues endlessly without taking action.”

5. Recruit candidates with strong time-management skills:

Use situational interviews to screen out candidates whose attitudes about time do not match those of the organization. For example, job applicants can be asked to choose an alternative among several available choices. Or, job applicants can beasked, ‘tell me about the last time when,’ and they are presented with a situation when they need to make decisions about how to manage their time.”

6. Analyze the implications of the cliché “time is money”:

“Benjamin Franklin wrote that ‘time is money.’ But time is more than money. It is the most fundamental resource that allows people and organizations to get other resources, such as financial, social, physical, and human resources. Without sufficient time, we cannot get any of these other resources that allow a firm to get ahead of the competition,” Aguinis said. “But time itself is often under the radar because ‘what is not measured does not exist.’ It is critical to raise awareness of time as a resource, measure it, and reward units and individuals who manage time well. Also, business leaders should identify and remove systems and norms that prevent people from managing their time well, such as bad bosses who force people in their departments to engage in time-wasting activities.”

7. Reimagine formal systems that can affect employees’ time-management effectiveness, including:

• Time structures: “Systems used to manage time, such as performance appraisal and reward systems that reward individuals for working long hours. For example, using punch- or time clocks or including a question on a performance appraisal form about how many hours a week employeesare at their desk.” Other time structures include project timelines, cleaning schedules, and holidays.
• Time norms: “Informal rules about how to do things right and wrong about time at work. They are based on values and are often implicit, but everyone knows them. For example, arriving at meetings late is not a big deal in many organizations or cultures.”

Technical AND Soft Skills Are What’s Needed Today

By Daniel Butcher

Some mentors and career counselors advise students and early-career professionals to focus on acquiring technical skills to make themselves desirable candidates for high-paying jobs. Other experts say that technical skills can always be learned on the job, so students and young professionals should focus on soft skills, since that’s what ultimately impresses hiring managers during the recruitment and interviewing processes. However, the reality is that most successful business leaders and managers excel in both areas.

Academy of Management Scholar Wendy Smith of the University of Delaware said that there’s debate over whether to prioritize social skills and emotional intelligence (EQ) or technical skills and intelligence quotient (IQ). If a person has tons of technical skills but no social skills, they call that the competent jerk, but if you have tons of social skills but don’t have the technical skills, you may be a lovely person who’s going to build the team, host barbecues, and charm clients but not really get the work done.

“There’s an underlying paradox, and the important piece here is figuring out how to do both—look, you’ve got to do both,” Smith said. “The big question is, ‘How does engaging the social skills enable you to learn the technical skills more effectively, and how are these interwoven with one another? How does engaging the technical skills using your IQ enable you to learn the social skills more effectively?

“If you are somebody with technical skills, then it opens up the possibility to have conversations with more confidence with other people with technical skills in your business and then develop a network of connections that allows you to then learn from and engage with other people,” she said. “If you are somebody who has the emotional intelligence to know how to build those networks and connections, then you’re the kind of person who’s not just stuck behind a computer on their own in the cubicle in the corner, but you’re someone who’s going to be able to learn from what’s going on and understand what’s required of you and gain more technical skills along the way.

“So it’s not just that these things sit side by side and we have to allocate resources between the two; it’s that—if done right—there is this interwoven, dynamic nature of hard and soft skills where they can help each other, and that’s an important insight of paradoxical thinking, or paradox theory.”

Four Social Media Communication Strategies for Professionals

By Daniel Butcher

Given the reputational minefields of social media, it’s important for professionals to think carefully about their strategies for online connections.

Academy of Management Scholar Nancy Rothbard of the University of Pennsylvania said there are essentially four strategies that she and her colleagues identified in their research on this topic.

1. Being open, which is the letting-it-all-hang-out strategy. This yields higher rates of engagement, although TMI (too much information) may be a hazard if you’re not careful.

“The benefit of the open strategy is that it’s easy, and that you’re very authentic, and so that authenticity really comes through to your connections,” Rothbard said. “The risk is that you reveal something that is problematic in the eyes of one of the multiple audience members.

“This is really challenging, because there isn’t only one audience segment that you’re talking to when you’re on social media,” she said. “It’s a broad-based, non-tailored set of platforms.

“The default is to disclose the same information to a broad set of people, and so, if you’re open, whatever you’re saying is going to go to everybody, and some parts of your audience may love it, and some parts may hate it.”

2. Audience strategy, which refers to carefully curating who is in your audience, often deciding to have personal or professional connections (but not both). This includes making careful decisions about who to connect with and which requested followers to accept.

“This strategy means that you’re very open with all of your disclosures, but you’ve carefully vetted who sees it, and you’ve got a limited audience that you’ll reveal your thoughts and feelings to,” Rothbard said.

“The problem with that is that you don’t always control who your audience members will disclose your posts to, so your audience members could repost or like something that you’ve shared and that other people who are not in your audience could see, so there’s some risk there,” she said.

3. Content strategy, which is aiming for a big-tent audience of both personal and professional connections, but carefully curating content to disclose.

“You might be disclosing personal content online, but you’re disclosing a really carefully vetted set of curated content that is designed not to offend and to be disclosed to a broad set of audiences,” Rothbard said.

“It’s the one that I use personally, because you never know who’s going to see your online disclosures, but the risk there is that people could think of you as being too curated and not authentic,” she said.

4. Hybrid strategy, also referred to as custom strategy, is taking a customized approach of disclosing different information to different audiences.

“That strategy would be ideal, but it takes a ton of skill and time to do it well, so if you don’t have the skill and you don’t have the time, then it could backfire on you,” Rothbard said.

Professionals Must Walk a Tightrope on Social Media

By Daniel Butcher

Professionals interact in complex ways with one another on social media that we’re living in. Technology is blurring the boundaries between work and home and changing the ways that peers establish relationship boundaries and how bosses communicate with colleagues.

Academy of Management Scholar Nancy Rothbard of the University of Pennsylvania said that something as simple as accessing Facebook, Instagram, X, and LinkedIn on their phones all day is affecting the ways interactions and connections with people happen during—and after—work. The pressure to connect with clients, members, colleagues, peers, and even bosses via social media, along with expectations that say something interesting, but nothing controversial or off-putting, can create a real bind.

“It’s really complicated, because on the one hand, it is a huge asset to be able to connect with these people in various ways—think about your social networks and how LinkedIn and other sorts of connection technologies make sure that you’re networking,” Rothbard said. “We’re taught that you have this low-level connection to lots of people—more people than you could ever connect with personally face-to-face, so there’s lots of positives to online social media and how that connects us to other people.

“But there are also real risks that are associated with the boundaries that become blurred in these contexts, for example, people at work learning something about you that you don’t want them to know, and they see you in a different light as a result, and you might worry about how that would reflect on you professionally,” she said.

“People are really uncomfortable with that across organizational hierarchy, but when they connect with people online through these technological platforms, they do expect some level of personal disclosure—they don’t like it when someone doesn’t ever post, because then they think that there’s something wrong or that person is spying on them, if they’re not disclosing anything personal about themselves.”

What Employees Can Do to Deal with a Broken Healthcare System

By Daniel Butcher

In the wake of the killing of UnitedHealthcare CEO Brian Thompson last year, frustration with the costs, paperwork, and denial rates of U.S. heath insurers and third-party administrators (TPAs) has boiled over. In the absence of legal reform, often employees trying to get the healthcare services they need feel powerless, but employers can do much more to hold their health insurance and administration vendors accountable.

Academy of Management Scholar Jeffrey Pfeffer of Stanford University said that rank-and-file employees who are struggling with denials of doctor-recommended healthcare procedures or labyrinthine administrative tasks should request a meeting with or write to their CEO, CFO, and the head of human resources (HR) and demand that they better manage the organization’s health insurance and TPAs.

“These are vendors, and just as you would manage, vet, and scrutinize a vendor or supplier of any raw material or electricity or software or computing power or whatever your vendors are, you ought to do a better job of overseeing your vendors and making sure that they are delivering what you want them to deliver in a cost-efficient manner,” Pfeffer said. “Stop putting up with all of this administrative complexity and overhead and the idea that you have to accept whatever pricing and administrative processes that the insurer or TPA offers and agree to live with denials.

“I interviewed a health insurance executive for one of my books, and he said, ‘Healthcare is not like any other service; it’s more complicated,’ but I don’t believe that at all,” he said. “You can find metrics of the percentage of our employees able to access care.”

Pfeffer urged executives and HR personnel to ask themselves:

• Are employees able to access care in a way that’s consistent with our diversity initiatives so that we’re not discriminating?
• Are employees able to get the care they need?
• Are they able to access mental-health benefits?

“‘What’s the health of your workforce?’ is a key question that’s interrelated with the success of your organization,” Pfeffer said. “This is not complicated, but we made it complicated.

“This is about delivering a service in a cost-efficient manner,” he said.