Using NBA, study finds that pay differences among top performers can erode cooperation

(Press-News.org) PULLMAN, Wash. — NBA teams that paid their core players inequitably won fewer games as a result of reduced cooperation, according to a Washington State University study with implications for workplace management.

While it draws on data from professional basketball, the study suggests that managers in the workplace should ensure they’re paying top performers fairly in relation to each other and emphasize the goal of team coordination — organized, synchronized effort, with each team member carrying out their role.

“For a team, it’s more than just effort, it’s also coordination, which includes effort but it has to be coordinated effort,” said Jeremy Beus, a professor in the Department of Management, Information Systems, and Entrepreneurship in the Carson College of Business and lead author of the new publication. “Merely working hard does not necessarily help the team. It needs to be coordinated effort.”

The study, published the journal Human Performance, deepens understanding of pay variability and team dynamics by looking through a new lens: Instead of comparing salaries across a whole team, Beus studied what happens when there are pay inequities among the most important players.

Most teams have higher- and lower-performing members, after all, and not all pay variability is inequitable.

“If the variability in pay is based on variability in performance, there’s no reason for anyone to feel there is unfairness,” Beus said. “If LeBron James makes more than me as a guy on the bench, I obviously expect that.”

But when there were disparities among a team’s core members, researchers found performance was harmed, due to a drop in coordinated effort.

Coordination was the key, the researchers found — beyond simple effort. If someone works very hard, but is out of sync with the team, it may not help the whole group and may even be counter-productive in some cases.

Beus has published other research using sports as a test bed to examine team dynamics, and he’s currently at work on a study of team performance under pressure among college football players.

“I’m a sports nerd who’s found a way to try to answer organizational questions with sports data,” he said.

For the latest work, Beus collaborated with co-authors Shaun Parkinson, who earned his PhD at WSU and is now an assistant professor at New Mexico State University, and Jay Bates of Rutgers University, who earned his PhD at WSU.

They studied data from NBA teams between the 2009-2010 and 2019-2020 seasons. The NBA offers many advantages for examining the relationship between pay variability and performance. There is ample public data, from salaries to statistics, and basketball is an environment where teamwork and cooperation are vital.

The researchers identified the team’s strategic core as the five players who played the most minutes, and used the team’s winning percentage as the measure of performance. They used two variables to gauge a team’s collective effort: rebounding and the percentage of loose balls recovered. To measure cooperation, they used the team’s defensive rating.

Teams with greater pay disparities among core players tended to have lower winning percentages — but only when viewed through the variable of coordination. There was no direct correlation between collective effort and team performance.

While there are obvious differences between pro basketball and the average workplace, the findings suggest ways that managers should think about how their top performers are paid. A relevant non-sports scenario would be a business that is experiencing salary compression — a flattening of salaries that occurs in tight labor markets, as companies pay more to attract new hires and wind up with older, more experienced workers feeling disgruntled and underpaid.

“Think about how you’re paying people,” Beus said. “If you don’t address salary compression, then you may have discontent and people may be more inclined to leave.”

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