Best Not to Know: Pay Secrecy, Employee Voluntary Turnover, and the Conditioning Effect of Distributive Justice

Alterman, Valeria; Bamberger, Peter; Wang, Mo; Koopmann, Jaclyn; Belogolovsky, Elena; Shi, Junqi

doi:10.5465/amj.2019.0231

Cited by 48 publications

(72 citation statements)

References 62 publications

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“…Regarding PFP system implementation, our theory indicates that it is important to manage the psychological distance at which a PFP system is perceived. While certainly it is impossible for organizations to control all of the information employees get about their PFP system, our theory suggests that pay communication is an important organizational practice that is at least under some control of the organization and can have several individual‐level and organizational‐level effects (Alterman et al., 2021; Bamberger & Belogolovsky, 2010; Belogolovsky & Bamberger, 2014; Marasi & Bennett, 2016; Park & Conroy, 2020). Our theory provides an explanation of why pay communication is not just a process of informing employees about the characteristics of their pay systems, but actually is an important process that can change the way the systems are perceived and thus ultimately their organizational‐level consequences.…”

Section: Discussionmentioning

confidence: 97%

When perception is reality, there is more than one reality: The formation and effects of pay‐for‐performance perceptions

Park

Sturman

2021

Personnel Psychology

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Compensation research has generally considered pay‐for‐performance (PFP) perceptions in terms of how people react to only a single PFP form or PFP systems as a whole, regardless of the complexity of the compensation system pertaining to the individual. Synthesizing construal level theory, expectancy theory, compensation activation theory, and Call and Ployhart's (2020) theory of firm value capture from employee job performance, we provide insights into how employees develop PFP perceptions when they are covered by a complex PFP system. We propose that (1) individuals shape PFP perceptions at different levels of mental construals, ranging from concrete to abstract; (2) concrete conceptualizations lead to specific, detailed, multidimensional perceptions of PFP system elements (i.e., expectancy, instrumentality, valence, and incentive‐intensity) while abstract conceptualizations lead to more general perceptions with fewer perceived dimensions; (3) an individual's construal level can change over time because of characteristics of the PFP system as well as external events, and (4) construal levels have different implications for PFP system effectiveness at the individual and organizational levels. We also discuss how this theoretical approach provides a structure for enhancing our understanding of modern pay practices that helps to close the gap that currently exists between compensation theory and practice.

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Section: Discussionmentioning

confidence: 97%

When perception is reality, there is more than one reality: The formation and effects of pay‐for‐performance perceptions

Park

Sturman

2021

Personnel Psychology

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“…Studies have shown that moving from low to high organization PID (Futrell & Jenkins, 1978) or introducing high PID about wage dispersion (Greiner, Ockenfels, & Werner, 2011) has a strong positive effect on employee performance, suggesting that high PID is likely to be associated with positive employee performance when it helps employees understand why there are pay differences (Nosenzo, 2013; Trevor et al, 2012). In contrast, if pay systems are poorly designed, high organization PID can be associated with worse employee outcomes (Alterman et al, 2021; Cullen & Perez-Truglia, 2018), particularly when there are concerns about distributive (Belogolovsky & Bamberger, 2015) or procedural justice (Zenger, 2017) or the workforce consists of many narcissists (LaViers, 2019).…”

Section: Outcomes Of Pid and Pay Secrecy/pay Transparencymentioning

confidence: 99%

“…Research has shown a positive relationship between PID and distributive justice, procedural justice, informational justice (Alterman et al, 2021), and interactional justice (Day, 2011). However, Bamberger and Belogolovsky (2010), in an experimental study, did not find statistically significant relationships between low PID and informational and procedural justice.…”

Section: Outcomes Of Pid and Pay Secrecy/pay Transparencymentioning

confidence: 99%

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Pay Information Disclosure: Review and Recommendations for Research Spanning the Pay Secrecy–Pay Transparency Continuum

Brown

Nyberg

Striver

2022

Journal of Management

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The amount and type of pay information made available by organizations to employees and between employees can have important effects on employee attitudes and behaviors as well as organizational performance. Although a large body of research on pay information exists, on topics ranging from pay transparency to pay secrecy, researchers have used inconsistent definitions (pay secrecy, openness, transparency, pay communications) and operationalizations that hinder knowledge development. In this paper, consistent with the theory of information asymmetry and based on research reviewed here, we promote a new integrative definition (“pay information disclosure”) that anchors both current and future research. We define the concept of pay information disclosure (PID) as the communication of relevant pay information between and among actors. By viewing pay information disclosure research in an information asymmetry context, with its focus on the causes and consequences of unequal access to information, we can synthesize research that examines motives for and outcomes of PID for individuals, organizations, and society. Based on our review, we outline a research agenda that identifies research questions and methods to stimulate studies to better understand the role of pay information in the workplace and in society.

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“…Marasi and Bennett (2016) made distinctions between the degree to which organizations disseminate pay information ( organizational restriction ) and the extent to which employees are allowed to discuss pay information with one another ( employee restriction ). Similarly, Alterman and colleagues measured the extent to which the organization communicates information about how pay is determined ( procedural transparency ), in addition to the extent to which employees are allowed to discuss pay ( communication openness ; Alterman et al ., 2021). Smit and Montag-Smit (2018a) make a similar distinction between pay non-disclosure (i.e.…”

Section: Elucidating the Pay Secrecy Constructmentioning

confidence: 99%

Exploring secrecy in pay communication: a conceptual matrix

Holtzen

2022

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PurposeThe purpose of this paper is to develop a conceptual framework that clarifies the construct of pay secrecy.Design/methodology/approachParalleling organizational justice research, two continua of pay information – a distributive continuum about pay raise outcomes and a procedural continuum of pay raise processes – are crossed to produce a 3 × 3 matrix with nine distinct forms of pay communication.FindingsDrawing on the substitutability effect from the organizational justice literature, the matrix highlights the importance of considering how the communication of different types of pay information interact with one another as individuals form pay perceptions.Research limitations/implicationsThe matrix framework illustrates that not only information content shapes pay perceptions, but also the extent to which different types of pay information are communicated, and how these different types of information interact. As with any conceptual framework, the current manuscript is limited by a lack of empirical testing.Practical implicationsManagers should be cognizant of the many different ways in which pay information can be communicated. A call is made to reconsider the use of traditionally binary terminology (secret or not) in favor of more accurate descriptions of the nuanced ways in which organizations communicate pay information.Originality/valueThe value of the pay communication matrix lies in the nine unique forms of pay communication arising from the interaction of two different forms of pay information – distributive (outcomes) and procedural (process).

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Best Not to Know: Pay Secrecy, Employee Voluntary Turnover, and the Conditioning Effect of Distributive Justice

Cited by 48 publications

References 62 publications

When perception is reality, there is more than one reality: The formation and effects of pay‐for‐performance perceptions

When perception is reality, there is more than one reality: The formation and effects of pay‐for‐performance perceptions

Pay Information Disclosure: Review and Recommendations for Research Spanning the Pay Secrecy–Pay Transparency Continuum

Exploring secrecy in pay communication: a conceptual matrix

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