Ignorance Is Bliss, or Is It? The Effects of Pay Transparency, Informational Justice and Distributive Justice on Pay Satisfaction and Affective Commitment

Abstract

Pay transparency—open access to comparative wages—may help reduce wage discrepancies and otherwise benefit organizations. A 2 × 2 × 2 between-subjects factorial design was used to test the effects of pay transparency, informational justice and distributive justice on pay satisfaction and affective commitment. Case scenarios were developed to manipulate these variables and test main effect and interaction hypotheses. Full-time employees in the United States ( N = 293) were recruited from Amazon’s MTurk. Results showed main effects of pay transparency and distributive justice on both pay satisfaction and affective commitment; an informational justice effect was revealed on affective commitment. Pay transparency had a larger effect on pay satisfaction when distributive justice was low than when it was high. Exploratory analyses revealed an interaction between pay transparency, gender and race on pay satisfaction. This study confirmed positive consequences of pay transparency policies, which are proposed to be a component of informational justice.

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

“…Extensive research examines the relationship between PID and pay satisfaction. Most studies find a direct positive relationship between high organization PID and pay satisfaction (Cappelli & Sherer, 1988; Christofferson, 2012; Futrell & Jenkins, 1978; Mahoney & Weitzel, 1978; Milkovich & Anderson, 1972; Scheller & Harrison, 2018), and some report an indirect relationship via justice perceptions (Day, 2011) or pay equity perceptions (Day, 2012). Since justice and equity perceptions involve interpersonal comparisons, the characteristics of the referent other often inform the PID–pay satisfaction relationship.…”

Employee responses to pay transparency

“…Clear and transparent communication of pay practice enhances employees' perceptions of fairness and organisational justice (Day, 2011). In addition, confidence in pay decisions being made fairly has a positive influence on satisfaction with pay (Scheller & Harrison, 2018;Williams, Brower, Ford, Williams, & Carraher, 2008). Higher perceptions of organisational justice have been associated with higher levels of organisational commitment and trust (Colquitt, Conlon, Wesson, Porter, & Ng, 2001).…”

The Influence of Organizational Justice Dimensions on Affective Commitment and Employees’ Counterproductive Behavior

“…Giving fair salary incentives by the company can make employees feel emotionally attached to the company and willing to give their best for the advancement of the company. Scheller & Harrison (2018) argued that providing incentives for work results that are in accordance with employee performance provide employee satisfaction so that employees' counterproductive work behavior can be minimized by the company. Several previous studies have proven that distributive justice can increase commitment and minimize counterproductive work behavior (Sahu and Pathardikar, 2014;Scheller and Harrison, 2018;Marcano and Castaño-Collado, 2020).…”

“…Scheller & Harrison (2018) argued that providing incentives for work results that are in accordance with employee performance provide employee satisfaction so that employees' counterproductive work behavior can be minimized by the company. Several previous studies have proven that distributive justice can increase commitment and minimize counterproductive work behavior (Sahu and Pathardikar, 2014;Scheller and Harrison, 2018;Marcano and Castaño-Collado, 2020). Thus, the following is the first and second hypotheses:…”