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Glossary

Relative Deprivation - the silent seeds of discontent

The principle of relative deprivation is at work everywhere. It's the idea that one person is deprived relative to another. The idea isn't always easy to understand and deal with, but it's always out there waiting to bite you in the rear.

As a small business owner, you'll have to deal with this issue. It will never go away. It will always be a factor when it comes to pay, bonuses, awards, recognition, work assignments, work hours, perks and the like. It's part of our human condition, and it must be dealt with.

To illustrate the concept, let me give you an example from my experience as a business manager and hiring authority.

Some time ago, I was building and managing a small team of consultants. My organization started out small, there were only three of us. But, our intention was to grow. My understanding of the key to growth in the organization was to hire the right players, and retain everyone that was currently in my employ. That seemed easy enough to do.

Pay for each member of my team was commensurate with their responsibilities and performance. That seemed fair to me. My job was to keep it that way, otherwise, someone would experience the feeling of relative deprivation, and I'd have a problem on my hands to deal with.

One day I wanted to hire a senior individual into my group to round out our skill set and provide more capability to win work and get it done. In other words, more billing capacity.

The individual I intended to hire was a good strong candidate - a senior guy. I wasn't considering anyone else because he was such a great fit for the organization. His skills, experience, location and ability to work with others was just about as perfect as I could imagine.

The only problem with this candidate was his salary requirements and his expected role in the organization. He wanted a salary that was more than what was being paid to the supervisor in my group, and he was expecting his role to be about the same as the senior worker bee in my group.

This was a perfect setup for relative deprivation, and I was having no part of it.

In light of this, I didn't hire him. Here's why I made that decision:

  • If he was paid more than the supervisor and wasn't going to perform up to the same level, then the supervisor would feel deprived relative to the new guy because the new hire would be paid more and provide less value to the organization.
  • My senior worker bee would also have felt a great sense of relative deprivation because the new hire would have been paid much more for the same level of performance.

I had a great couple of guys to work with. They were entirely trustworthy and good technical people that I could count on. And, we all had a great relationship going. There was no way that I was going to jeopardize any of that just to add one more "horse" to the team.

The notion of relative deprivation can be seen very clearly when there is a "teachers pet" at school or work, or some other situation where special attention, compensation or allowances are made for one individual and not another. If you have employees, you'll have to watch out for this because it is always in play, and you won't always know about the discontent it causes. Your job as the boss is to make certain it doesn't get a foothold in your organization.

Done with Relative Deprivation, take me back to High Overhead


The only business you'll really ever be part of is your own.

Wondering about what to do with your savings so inflation doesn't eat it up? Start your own enterprise. It's a good way to invest your capital and make it work for you. Who will be better at keeping an eye on your investment than you?