Boyka Bratanova, University of St Andrews, Department of Management (bab20@st-andrews.ac.uk)
Silvia Filippi, University of Geneva, Department of Psychology and Educational Sciences (silvia.filippi.1@phd.unipd.it)
Kim Peters, University of Exeter, Business School (K.O.Peters2@exeter.ac.uk)
Nik Steffens, University of Queensland, School of Psychology (n.steffens@uq.edu.au)

Theoretical Background and Project Aims

Most of us spend a large part of our lives at work, and over the past five decades, many employees have become increasingly aware of the growing income inequality shaping organizational life. While social psychological research has extensively examined the consequences of perceived economic inequality in broader society (Peters & Jetten, 2023), its application to organizational settings remains relatively underexplored (see Tanjitpiyanond et al., 2023; Filippi et al., 2024 for some exceptions).

This project aims to investigate how vertical pay disparities within organizations, namely the perceived gap in pay between CEOs and regular employees, affect employees’ social experiences at work. We focused specifically on perceived workplace loneliness, conceptualized as “the psychological pain of perceived relational deficiencies in the workplace” (Wright & Silard, 2021, p. 2).

Drawing on recent competitiveness-based theoretical models (Sommet & Elliot, 2023), we argue that people perceiving high vertical pay gap regard the normative climate inside the organization as characterized by competitiveness, mirroring the effect of economic inequality in society at large (Sánchez-Rodríguez et al., 2023; Sommet & Elliot, 2023; Filippi et al., 2023). As a result, this sense of competitiveness is likely to harm interpersonal relationships, making people compete (Sommet & Elliot, 2023), potentially increasing loneliness perceptions.

Empirical research and findings

To empirically test these questions, we conducted four studies: a cross-sectional survey in Italy (Study 1, N = 209), a time-separated correlational study designed to minimize common method bias (Study 2, N = 417, in the UK), and two pre-registered experimental studies in which pay gaps were manipulated (Study 3, N = 312; Study 4, N = 438, both in the UK). In Study 4 we also manipulated the mediator (competitiveness) in addition to the predictor, using a blockage manipulation (Pirlott & McKinnon, 2016).

Across all studies, results consistently showed that higher perceived (or experimentally induced) pay gaps led to heightened perceptions of a competitive organizational climate. This perceived competitiveness, in turn, predicted greater feelings of workplace loneliness.

As an exploratory hypothesis, we tested the role of perceived organisational mobility, that is, employees’ belief in their chances of career progression in their organisation, as a potential moderator. Across studies (1, 3, and 4, but not in Study 2), perceived pay gap was associated with lower expectations of organisational mobility. In Studies 1 and 2, organisational mobility moderated the impact of perceived inequality on competitive climate: when mobility was perceived as low, the link between inequality and competition was stronger. In the experimental studies (3 and 4), perceived mobility was influenced by the manipulation of pay gap, despite efforts to hold it constant across conditions. Indeed, in the high inequality condition, people perceived it as less likely to have a promotion than in the low inequality condition. This suggests that organisational mobility is not only functioning as a boundary condition in the link between pay gap and competition, but could also be a dynamic construct affected by organisational pay gap, with downstream implications for employees’ sense of connection with others.

Contributions of the research

These findings contribute to a growing body of research on the effect of economic inequality at the organisational level. They highlight how structural features such as pay disparity do not operate in a vacuum but shape employees’ perceptions of the workplace environment. Specifically, our research supports the idea that perceived economic inequality fosters competitive climates that may undermine social relations, with perceived mobility further enhancing these effects.

From a practical standpoint, the results point to critical organisational concerns. First, they suggest that large internal pay gaps may have unintended social costs: they signal a competitive environment, potentially leading employees to feel isolated from colleagues. This could explain why some organisations are reluctant to disclose salary structures transparently.

Second, the findings offer psychological support for efforts to regulate executive compensation or implement internal pay ratio limits. Reducing extreme pay differentials may not only promote fairness but also support healthier social dynamics in the workplace.

Lastly, promoting a workplace culture that reduces unnecessary competition may serve as a protective factor in highly unequal environments. Moreover, organizations should invest in transparent career development processes and signal that promotions are achievable and not reserved for a select few. Such efforts could help mitigate the relational effects of inequality, contributing to more cohesive and psychologically sustainable work environments.

Contribution to wider research activities of the research team

The studies supported by the EASP seedcorn grant set the scene for a more comprehensive project examining the role of inequality-induced competition and employees’ social wellbeing at work. In particular, as a pilot measure, we also tested the use of political strategies as a function of increased competition arising from large vertical inequality, and their negative effect on employees' social outcomes. The pilot results offer a promising avenue to further examine social well-being at workplaces marked by steep pay inequalities. The research team plans to build upon the research already completed with the support of the EASP seedcorn grant and develop a grant proposal to continue this line of enquiry and shed much-needed light on how intra-organisational dynamic is affected by large vertical inequalities and how these shape employees’ psycho-social functioning at work.

References

Peters, K., & Jetten, J. (2023). How living in economically unequal societies shapes our minds and our social lives. British Journal of Psychology, 114(2), 515-531. DOI: https://doi.org/10.1111/bjop.12632
Tanjitpiyanond, P., Jetten, J., & Peters, K. (2023). A social identity analysis of how pay inequality divides the workplace. Group Processes & Intergroup Relations, 26(3), 720-737. https://doi.org/10.1177/13684302221074550
Filippi, S., Salvador Casara, B. G., Peters, K., Maass, A., Feraco, T., & Suitner, C. (2025). They don’t really care about us: the impact of perceived vertical pay disparity on employee well-being. European Journal of Work and Organizational Psychology, 34(1), 42-57. https://doi.org/10.1080/1359432X.2024.2415127
Filippi, S., Salvador Casara, B. G., Pirrone, D., Yerkes, M., & Suitner, C. (2023). Economic inequality increases the number of hours worked and decreases work–life balance perceptions: longitudinal and experimental evidence. Royal Society Open Science, 10(10), 230187. https://doi.org/10.1098/rsos.230187
Wright, S., & Silard, A. (2021). Unravelling the antecedents of loneliness in the workplace. Human Relations, 74(7), 1060-1081. https://doi.org/10.1177/0018726720906013
Sommet, N., & Elliot, A. J. (2023). A competitiveness-based theoretical framework on the psychology of income inequality. Current Directions in Psychological Science, 09637214231159563. https://doi.org/10.1177/09637214231159563
Sánchez-Rodríguez, Á., Rodríguez-Bailón, R., & Willis, G. B. (2023). The economic inequality as normative information model (EINIM). European Review of Social Psychology, 34(2), 346-386. https://doi.org/10.1080/10463283.2022.2160555
Pirlott, A. G., & MacKinnon, D. P. (2016). Design approaches to experimental mediation. Journal of experimental social psychology, 66, 29-38. https://doi.org/10.1016/j.jesp.2015.09.012