Never ask a man’s salary or a woman’s age”—this old saying has never caught on in India over the ages. It takes just 10 minutes with a stranger on a train before you are asked about your salary. This practice of sharing salary openly may seem insignificant to most people, but it has had a damaging effect on India’s pace of innovation. Let me explain.

It is very well established that “what gets rewarded gets done.” Managers frequently want to reinforce best practices and good results by rewarding the performers in the team. These rewards are typically monetary in form of a hike in salary, a bonus, some stock options, non-monetary rewards like a promotion, or recognition in public. However, in reality, the typical Indian manager does not find it easy to reward proportionately for the fear of upsetting other team members. Since most junior team members and some seniors share their compensation information quite freely for various reasons. Between the lack of confidentiality and fear of attrition, the Indian manager has very little leeway to reward the star performers and feels forced to treat everyone as equal members of the team.

The consequence of such constraint in rewarding the stars monetarily sends the wrong message to the team that “average performance is good enough.”

Such messages result in frustration and pressure among the team members, which may end in the employees not achieving their full potential or leaving to join a different team. As and when the good performers leave a team, inevitably the caliber of the team spirals down. It affects the team potential and the individual performance. It leaves employees in a confused state of mind on the value of hard work, innovation and higher productivity.

Thus, open sharing of compensation information has definitely resulted in lower performance, lesser innovation, and lower wealth creation among individuals, than would have been possible otherwise.