Detecting a shade of schadenfreude in employee satisfaction with salary raises

ABSTRACT

This is the first study that explores the schadenfreude effect in employee satisfaction with and reaction to five-different salary raises. Authors construct a unique data set that was created by annually surveying employees from a representative U.S. public university over 5 years. Individuals demonstrate the emotion of schadenfreude in terms of the interactive impact of the raises of other employees. The results also indicate that awarding a one-time, small increase in compensation is not to be recommended for employee satisfaction and retention.

KEYWORDS:

• Employee satisfaction
• schadenfreude effect
• employee pay
• compensation models

JEL:

• J20
• J28
• I20

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The full details of theoretical model are available from the authors.

² The answers to these variables that measure salary raise satisfaction are coded in 7-point Likert scale. ‘strongly disagree (1)’, ‘disagree (2)’, ‘disagree somewhat (3)’, ‘neutral (4)’, ‘agree somewhat (5)’, ‘agree (6)’, and ‘strongly agree (7)’.

³ The results for other outcomes are not shown and found to be similar to Table 3 outcomes.

⁴ We conducted three robustness checks to ensure the strength and soundness of our results. First, we focus on the upper distribution of the satisfaction rating scale. We define an indicator variable that takes on the value one for choosing strongly agree and agree for these three statements, and zero otherwise. The second and third robustness checks involve studying the impact of the raise percentage rather than the raise receipt status on faculty satisfaction using Probit and Ordered Probit models, respectively. Our findings, which are available upon request form the contact author, are consistent with the schadenfreude effect.