Dating the boss found to boost pay (especially for men)

Having a relationship with a higher-up in the workplace can increase income by 6 per cent, thanks to promotions, pay rises and other perks awarded due to nepotism.

Many a CEO has been ousted by an office romance.

As well as the infamous Coldplay “kiss cam” moment, which exposed the clandestine relationship between Astronomer boss Andy Byron and his head of human resources, Kristin Cabot, there seems to have been an inordinate number of red-faced resignations this year.

The then chief executive of Astronomer Andy Byron and its chief people officer at the time, Kristin Cabot, at the Coldplay concert. Aresna Villanueva

Nestlé chief executive Laurent Freixe lost his job in September after an investigation found he failed to disclose a romantic relationship with an employee. Only a year into the role, he was pushed out for violating the company’s code of business conduct.

According to workplace compliance-training platform Ethena, his departure is the eighth unexpected exit of a CEO in the European consumer sector since last September.

Closer to home, Anthony Heraghty, the boss of Super Retail, which owns Rebel Sport, was fired for lying to the board about an alleged relationship with his company’s former head of human resources, Jane Kelly.

Aside from the broken hearts and families, the fallout from sexual indiscretions, whether they are related to workplace sexual harassment or a relationship with a subordinate, can be pricey for shareholders, too.

A study of 219 examples of management misdeeds from 1978 to 2012 found that when the CEO was implicated, it could cost shareholders up to $US226 million ($348 million).

What happens when you date the boss?

But a new report flips the narrative from focusing on the reputational and financial fallout for a company and its CEO, to look at what happens to the subordinate in a workplace relationship, financially and career-wise.

It finds that dating someone in a superior position in the workplace can increase a subordinate’s earnings by 6 per cent, because of promotions, pay rises, and other perks awarded by the person in the higher role.

The nepotism also extends to skills attainment – the subordinate partner is found to gain extra mentoring and work support that might lead them to advance in the workplace based on merit.

The Impacts of Romantic Relationships with the Boss report, published by the National Bureau of Economic Research, is based on a study of cohabiting couples in Finland.

The study mostly focused on women in relationships with male managers, as these were found to account for the vast majority of manager/non-manager relationships, according to the report, but it also included a small sample of men who had entered or ended a relationship with a female manager. Same-sex couples were excluded from the analysis because the data was limited.

The study found that males who dated female managers experienced a larger boost to earnings than the other way around.

The study also looked at the decline in earnings experienced by a subordinate once a break-up occurred and found that this could trigger an abrupt 18 per cent earnings decline for women, which was found to persist for at least four years after the separation.

The estimated decline in earnings was found to be twice as large for men who broke up with a female workplace manager.

The reasons for the sharp decline in salary are that the subordinate worker is more likely to exit the place of employment once the relationship has ceased, and once they leave, they tend to make less advantageous firm-to-firm moves, the report says.

The spillover effect

The study also examines the spillover effect of manager-subordinate workplace relationships on the broader workforce and finds that many employees feel discomfort or resentment upon learning about a relationship at work.

They often attribute pay increases to favouritism rather than merit, which undermines morale and even leads to increased turnover rates.

“Every promotion, assignment, or disagreement can be viewed through the lens of favouritism or conflict of interest,” the authors write. “Higher earnings gains for those in relationships with a workplace manager could lead to resentment among coworkers who might (rightly or wrongly) view this as preferential treatment.”

According to the Society for Human Resource Management, more than two-thirds of HR professionals say the perception of favouritism or unfair treatment is their top concern regarding workplace romances.

“When we talk about the ripple effect, it’s not just people leaving. It affects productivity, team stability, and that’s a big cost to the bottom line,” says recruitment specialist and author Roxanne Calder.

“Even when it is out in the open, [the person in the relationship] might be privy to information that’s not fair, or be exposed to private conversations and confidential matters. They could have the heads-up on something that could be influential to the sharemarket, to pricing, to promotions, redundancies – anything that is sensitive in nature.

“Relationships are going to happen at work, but if people are aware of the risks, they can manage them, instead of it being an after-effect.”

In Australia, a study by employment website Seek found that one in four workers had been in a romantic relationship with a colleague, and office romances were most prevalent in white-collar industries.

In 2018, then prime minister Malcolm Turnbull introduced a policy prohibiting ministers from having sexual relationships with their staff, following a scandal involving then deputy prime minister Barnaby Joyce and his staff member Vikki Campion. The aim of what was soon dubbed a “bonk ban” was to establish a more respectful workplace culture.

Gazelle Kalk, a legal adviser and head of content for employment law specialist Peninsula Australia, says that although organisations cannot prohibit or stop romantic relationships developing between colleagues, they should have a personal relationship policy in place, which workers are familiar with.

“As soon as an employee starts, they should be given an employee handbook, and within that, they should have some sort of office romance or personal relationship policy in place, so they understand what is expected of them,” Kalk says.

That should extend to sexual harassment and bullying as well, she adds.

“Making sure that there’s some sort of disclosure requirement to avoid any sort of conflict of interest that may arise, and in particular, if there is a power imbalance.

“If a manager is dating a subordinate, making sure everyone is treated fairly regarding the application of that policy is key and making sure there’s a culture of disclosure and transparency – and that can only be done through the use of a policy.”