Blogs | December 7, 2011

How not to negotiate a pay rise

It’s that time of year when many workers get annual pay reviews and end of year performance assessments – so thoughts turn to earnings and how we can boost them.

Surprisingly, being overly conscientious may hinder attempts to get a pay rise, researchers have found, and a bizarre range of other characteristics may help.

The price of caring too much
Guido Heineck of the Institute for Employment Research in Nuremberg, Germany, has found that hard work doesn’t pay. He estimates that, in the UK, the 25% of men who are most conscientious – as measured by “big five” personality tests – earn an average of 7.1% less than the averagely conscientious. For women, the penalty is slightly greater, at 8.7%. This controls for influences on earnings, such as education and occupation.
This could be because being too conscientious causes you to work too slowly and to miss deadlines. High standards aren’t everything.
But if conscientiousness doesn’t pay, surely it helps to be cheerful and co-operative?
It seems not. Dr Heineck also found that the quarter of people who score highest for agreeableness also earn less – 11.1% for women and 7.8% for men. It is, though, niceness that is punished rather than nastiness that is rewarded; the least agreeable people earn no more than average.
So, if being nice and conscientious doesn’t raise your pay, what does? Economists have discovered some surprising things.

Returns on height, beauty and more
Marriage pays - if you’re a man: In the UK and US, married men earn around 15% more than apparently comparable singletons. This could be because the things that a woman looks for in a husband – such as dependability – also make a man attractive to employers.
Height: Whether you’re a man or a woman, it seems lankiness pays. In the UK and US, an extra inch of height is associated, finds research, with one or two per cent higher earnings. According to those calculations, a six-footer would be paid some 10% more than a five foot sixer. One reason for this is that height is a sign of good health in childhood, which is correlated with high intelligence.
Handedness: Left-handed men earn, on average, more than four per cent more, according to a study, than right-handers, although left-handed women earn four per cent less. This might be because handedness is correlated with neurological differences - some say left-handed men are more prone to depression - some implications of which might raise earnings; creativity is the obvious possibility.
Looks: There’s evidence from around the world that good-looking people earn more than ugly ones; this is true for men as well as women. (Yes, your boss might be an exception). In Germany, for example, research suggests someone scoring one point higher for attractiveness on a scale from one to 11 earns around three per cent more. This is a powerful effect. It means the difference between the earnings of the ugliest and prettiest Germans is the same as the difference between university graduates and non-graduates.
Quite why looks should pay so well is unclear. They do so even controlling for education. One possibility is that good-looking people are considered to be more trustworthy, and so employers are more inclined to hire them; this trust is not necessarily rewarded, but that’s another story.

Dress for success?
The sad thing here is that there is not much that we can do as individuals to affect these factors of height, beauty and handedness. Getting married is, perhaps, a step too far as a way to get a pay rise.
While it’s possible to improve your appearance by dressing well, such investments do not earn a large return. Daniel Hamermesh of the University of Texas at Austin, and author of Beauty Pays, has estimated – from a study of Chinese women – that only 15% of money spent on clothing and cosmetics is recouped in higher wages.
Perhaps we can dress for success, then, but without going overboard. A €300 suit may do the job for office workers just as well as a €1,000 one.
As indicated above, there are more, broader ways of upping the chance of a bigger pay cheque. Education is linked with higher earnings (and higher employment) although the many costs of university study can eat away at the premium. Likewise, career choice and worker supply and demand can come into play.
What we can do is also recognise that differences in wages are not entirely related to what we deserve. As Friedrich Hayek, the most intelligent defender of free markets wrote, peoples’ wages “will often have no relations to their individual merits or needs”.


Chris Dillow
Chris Dillow

Investors Chronicle writer and economist