Pay Secrecy, Trust and Employee Turnover at the Individual and Firm Levels: Fairness Judgements and the Moderating Role of Distributive Justice Climate
SpeakersPeter Bamberger (Tel Aviv University, Israel)
LocationUniversity of Amsterdam, Roeterseilandcampus, Building M
June 05, 2019
ABS Leadership & Management Seminar
The relationship between pay and human capital resources is well established, with pay mix, level and structure serving as important levers by which employers may attract, develop, retain and leverage the individual and unit-level capacities associated with organizational effectiveness. However, less is known about the impact of pay communication practices such as pay secrecy (PS), on these same outcomes. This is problematic in that the motivational and sorting effects of compensation are largely contingent upon employee pay perceptions, with pay communication practices serving as a key mechanism by which employers may influence such perceptions. After reviewing earlier research on pay transparency, I address this gap in pay communication research by examining the association between individual and firm-level PS perceptions/practices and both individual-level turnover intentions, and enterprise-level turnover rates. Building on the theory of fairness judgements (van den Bos & Lind), I argue that individual or shared perceptions of the allocation of organizational rewards (i.e., distributive justice or DJ) colors how employees frame PS, and thus plays a key role in determining the impact of PS on turnover.