How Salary Measures Up to Co-Workers' Is Critical to Job SatisfactionWhile earning a good salary is essential to being happy at work, what is more important is that we are earning as much — or more — than our colleagues.

The study, by Professor Eduardo Pérez Asenjo of the Economics Department at Universidad Carlos III in Madrid (UC3M), also found that if a worker’s salary is less than that of his or her peers, the employee will actually work more.

“The most likely explanation lies in social comparisons, although it could also be due to the idea that if those around me earn more than I do, it might indicate that if I work hard I will end up earning as much as they do,” said Pérez Asenjo, who also works at the Banco de España (the National Bank of Spain).

The researcher said his findings can be applied to labor management or human resource management in companies.

He says it “might be relevant” that when a manager is setting salaries to realize that an employee is not only concerned with what they make, but what everyone else is making as well.

“My personal opinion is that employees’ happiness is not really taken into account in work environments, from the company’s perspective,” he concluded.

The study was published in the Journal of Population Economics.

Source: Universidad Carlos III in Madrid