Research finds that money makes meaner managers

The higher the salary, the meaner the manager, shows research by a team at the University of Utah’s David Eccles School of Business.

The study, presented at the recent meeting of the International Association of Conflict Management in Boston, shows that higher levels of executive pay are associated with meaner behavior to lower-level employees. And, enhanced power triggers this behavior.

In their paper, “When Executives Rank in Millions: Meanness in Organizations,” the authors find that “higher income inequality between executives and ordinary workers results in executives perceiving themselves as being all-powerful and this perception of power leads them to maltreat rank-and-file workers.”

The authors are Sreedhari Desai, a doctoral candidate in management at the University of Utah and a fellow at Harvard Law School’s Program on Negotiation; Arthur P. Brief, George S. Eccles chair of business ethics and presidential professor at the University of Utah; and Jennifer M. George, Mary Gibbs professor of management and professor of psychology at Rice University.

“Our study adds more fuel to the fire over executive compensation in America,” Brief said.

“It further demonstrates that there are unintended consequences associated with excessive pay that CEOs receive.”

There’s a long line of research that shows that power corrupts, Brief explained. “Our study is the first, we believe, to link power to the relationship between executive compensation and treatment of employees.”

The team first measured “meanness” among 650 firms, which are part of a data set on corporate social responsibility from Kinder, Lydenberg, Domini and Co. To develop a “meanness” score, they used such measures as whether the companies had paid fines for employee mistreatment or had profit sharing. The higher the level of executive compensation, the higher the meanness score.

To further test their findings, they conducted a laboratory study. “Managers” were give a choice of firing or retaining “employees” based supposedly on performance (which was actually the same in all cases). They found that managers with higher income also perceived they had greater power -- and were more likely to fire employees with average performance.

Available on the Social Sciences Research Network, the paper is on the site’s Top Ten download list in psychology since its news appeared in a Harvard Business Review blog. (ssrn.com/abstract=1612486) It is currently under review at Administrative Science Quarterly.

About the authors
Arthur P. Brief is the George S. Eccles chair in business ethics and presidential professor in the at the University of Utah’s David Eccles School of Business. His research focuses on the moral dimensions of organizational life (e.g., ethical decision making, race relations, and worker well-being). In addition to having published more than a hundred journal articles, Brief is author or editor of several books including “Attitudes In and Around Organizations” (Sage, 1998) and “Diversity at Work” (Cambridge, 2008). He is a past editor of the Academy of Management Review and currently co-edits Research in Organizational Behavior and the new Academy of Management Annals. He is a fellow of the Academy of Management, Association for Psychological Science and the American Psychological Association. Brief has been a Fulbright Fellow in Lisbon, a Batten Fellow at the Darden Graduate School of Business at the University of Virginia, and the Thomas S. Murphy Distinguished Research Professor at the Harvard Business School.

Sreedhari Desai is currently a Ph.D. candidate in management at the University of Utah’s David Eccles School of Business and a fellow at Harvard Law School’s Program on Negation. She did her undergraduate studies at the Punjab Engineering College and has a master’s degree in finance from the University of Utah.

Jennifer M. George is the Mary Gibbs Jones professor of management and professor of psychology in the Jesse H. Jones Graduate School of Business at Rice University. She has published numerous articles in leading peer-reviewed journals, received many awards for her research and ranks among the most highly cited research scholars in the field of management. She is, or has been, on numerous editorial review boards including the Journal of Applied Psychology, Administrative Science Quarterly and the Academy of Management Review.