A Theory of (Employee) Relativity—and Happiness

As organizational leaders increasingly embrace happiness in the workplace as a precondition for attracting and retaining top talent, they must also confront an important feature of human nature: we are prone to comparing ourselves with others.

Most of us engage in this behavior daily, often unconsciously. In the workplace, however, manifestations of this behavior are more obvious and intentional. We tend to focus on our comparative success, advancement and, perhaps most ubiquitously, compensation. Comparisons around this last factor, relative compensation, are often a leading source of workplace unhappiness. Understanding this reality is critical to optimizing what eludes so many workers and, in turn, organizational cultures: happiness.

The Research

In 2009 and 2010, researchers from the Paris School of Economics reported several findings based on data from the European Social Survey, which included about 19,000 people across 24 countries. First, a staggering 75% of respondents believed that it was important to compare their income with others, including work colleagues as well as friends and family. Even more compelling was the finding that those who held this belief were less happy. Indeed, there was a correlation between how important these comparisons were to the respondents and the extent to which they felt depressed or dissatisfied with life. The researchers concluded: “Constantly looking over one’s shoulder seems to make the world a less happy—and more unequal—place.”

A later study out of the Universidad Carlos III in Madrid offered a similar conclusion: earning income at work is important for happiness, but potentially even more important for happiness is whether and how workers compare themselves to others. Specifically, the study revealed that most people wanted to compare their income to others’ and that they were unhappier and felt the need to work even harder if they believed their peers might earn more than them: “the effect of others’ earnings on my happiness is negative, because I compare myself to them and it makes me unhappy to earn less than them; so I work more hours so that I can earn the same as or more than them.”

The Comparing Mind

The above findings should not be surprising to students of human nature. We naturally compare ourselves to others, and this is not always a bad thing. For example, we often motivate and improve ourselves by comparing ourselves to a mentor, a parent, or a “role model.” But there is also a dark, more pervasive side to this compulsion – what some call the “comparing mind.” The comparing mind (think “keeping up with the Joneses”) can make us feel jealous, inadequate, unsuccessful, and yes, unhappy, because we seek validation and happiness not by looking at ourselves but by comparing ourselves to others.

In its darkest form, the comparing mind allows us to be happy only when others are worse off than we are. In the short story “The Ones Who Walk Away from Omelas,” by Ursula Le Guin, we are presented with Omelas, a city of utopian perfection whose inhabitants live blissfully. They have everything they want and do not even need others to impose rules on them. Yet, there is one small, horrifying requirement: one child must live a life of abject misery. The child is intentionally imprisoned, malnourished and mistreated. Most of the city willingly accepts the fate of this child, though some do not and choose to leave.

The Omelas story is widely interpreted as following the “scapegoat” motif, but there is something more subtle and universally tragic to it. It speaks to the conditions of human happiness, including, for many, the condition that someone else is worse off.

Some Solutions

So, what can leaders do to address the comparing minds of their employees? Well, remember that we are talking about the laws of human nature, but those laws are not absolute.

1. Be fair – and appear to be fair.

Employees will feel more confident that they are treated fairly as individuals if they can be confident that their company treats people fairly in general. But being fair requires discipline and intentionality. Companies that are serious about fair compensation practices have clear processes not only to set compensation but also to review it periodically to ensure fairness and consistency. They proactively seek out and address instances of bias; they pay attention to what other companies are doing; and they build a reputation for their diligence. They speak openly about their practices not only to promote fairness as a value but also to ensure that their team members know about their practices. Much as a judge is required to be beyond even the appearance of impropriety, so too are organizational decision makers around compensation.

2. Utilize a team or committee approach.

Even the best-intentioned, most experienced people will make better and fairer compensation decisions when they collaborate with others. Team or committee structures offer safeguards against unfair decisions and offer greater assurances that decisions will be thoughtful and not arbitrary.

3. Use objective compensation structures when possible.

It is not always possible to be objective in matters of compensation. People, after all, are unique. Yet, to the extent it is possible to utilize objective structures, employees will gain confidence they are being treated consistently with others. Objective compensation structures, however, also have drawbacks, which need to be balanced with their benefits.

4. Utilize bonus and other variable structures.

Each employee’s performance will vary annually, and it is appropriate for their compensation to reflect those variations. When employees understand that they are treated like their peers generally but that performance-based differences will be reflected through a variable compensation component, they are more likely to understand periodic differences relative to their peers.

5. Be clear about the reasons for differences.

People are more likely to accept differences in compensation when they understand the justifications for them. It is important to be transparent about how compensation decisions are made and which factors are considered.

6. Acknowledge that no compensation system is perfect.

The perfect compensation system may very well exist, but it has not yet been discovered. Organizations that are honest about this are better positioned to earn the trust of their employees, especially when they acknowledge flaws.

7. Foster a culture of valuing more than money.

A culture that values money above all else encourages people to think about themselves, their contributions, and their rewards solely in financial terms. Money matters, but fostering a culture that also values meaning, impact, and teamwork enables people to find value in other ways, in addition to compensation – and they may just become happier along the way.