Pay Equity as a Mediator of the Relationships Among Attitudes and Communication About Pay Level Determination and Pay Secrecy

Abstract

Although a limited amount of research exists on pay communication, most shows that pay communication is associated with positive attitudes. Little research exists on pay secrecy and its outcomes. Using equity theory, this article explores the dynamics of how perceived pay communication and perceived pay secrecy policies relate to desirable attitudes. The article proposes that pay equity is the link that mediates these relationships. Data were collected in a U.S. public utility, and findings reveal that perceived communication about how pay levels are determined is positively associated with affective organizational commitment and three dimensions of pay satisfaction, and most of these relationships are fully or partially mediated by pay equity. While perceived written pay secrecy policies show no relationship with attitudes, perceived unwritten secrecy policies negatively predict pay administration satisfaction and this relationship is mediated by pay equity. Finally, neither written nor unwritten pay secrecy policies are related to whether or not respondents report discussing their pay.

Addressing Internal Stakeholders’ Concerns: The Interactive Effect of Perceived Pay Equity and Diversity Climate on Turnover Intentions

“…While we did not measure perceptions of relative deprivation directly, it seems plausible, that the turnover intention is an attempt to resolve the psychological discomfort arising from the perception that the minority employee's outcomes are not equitable in comparison to relevant others' outcomes. Our findings are consistent with recent research suggesting that organizations, directly or indirectly, are seeking to address employee stakeholders concerns by establishing the diversity climate (Buttner et al 2010;Guillaume et al 2014;McKay et al 2007) and working to achieve pay equity (Balassiano and Salles 2012;Day 2012;Stewart et al 2011). Consistent with the ethical dimension of CSR, Chavez and Weisinger (2008) report that organizations continue to seek a better understanding of how to build an organizational environment that is effective at attracting and retaining minority employees.…”

“…Employee perceptions of pay equity may be malleable (Day 2012). Sharing information with employees of color about pay levels and providing detailed information during performance review meetings with employees may help clarify the rationale for their pay levels and enhance perceptions of pay equity.…”

“…As Pettigrew (2002) notes, one possible response is to conclude that a fair exchange is not possible in the current organization and therefore to develop turnover intentions in an effort to seek greater outcomes, and thereby a more equitable exchange, in a different organization. Empirical research has indicated that perceived pay equity influences a number of important employee outcomes, including pay level satisfaction (Brown 2001;Dreyer 1981), affective organizational commitment (Day 2012), absenteeism (Torre et al 2015), and voluntary turnover intentions (Summers and Hendrix, 1991). Based on social identity theory, relative deprivation theory and equity theory and the related empirical findings presented above, we propose the following hypothesis:…”

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

“…In one study, Belogolovsky and Bamberger 65 found that when pay was not transparent in a group, participants were less willing to remain in the group to complete additional tasks. Day, 66 however, found no relationship between pay transparency and organizational commitment in a survey of workers at a utility company. Although conflicting results have been reported for the relationships between transparency, satisfaction and commitment, social exchange theory may provide clarity.…”

Making sense of egalitarian pay: Reconceptualising its treatment in organisations

“…Individuals sensemaking of pay practices and their ensuing receptivity are to a degree socially constructed. Information that individuals receive relative to amounts of pay, and methods used to determine any pay increments, crucially affect how compensation is received by members (Day, ; Lawler, ; Noe, Hollenbeck, Gerhart, & Wright, 2003).…”