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

Abstract

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.

Compensation and performance: A review and recommendations for the future

“…Earlier we focused on perceived fairness, satisfaction, and turnover (or intentions). Turning to work motivation and performance, Brown et al (2022) find that most studies show a positive relationship with transparency, consistent with Lawler (1967). Belogolovsky and Bamberger (2014), for example, found, using a lab experiment, a positive effect of transparency on performance, via an incentive effect, but also via a sorting effect (consistent with Alterman et al, 2021;Card et al, 2012;SimanTov-Nachlieli & Bamberger, 2021).…”

“…(2021) results together with those of Card et al (2012) suggest pay transparency effects will be more positive for those with higher relative pay, and lower for those with lower relative pay. Brown et al (2022) reconceptualize pay transparency/secrecy through the lens of information asymmetry among senders (organizations or colleagues) and receivers (employees), and then summarize research on the impact of pay transparency on a variety of outcomes and in different contexts. Earlier we focused on perceived fairness, satisfaction, and turnover (or intentions).…”

“…Pay transparency has links to the literature on pay dispersion (Brown et al, 2022) given that the effects of pay dispersion likely depend on whether it is viewed as fair or not, and that evaluation (and to some degree its accuracy) depends on having information about the pay of peers and other social comparisons (Shaw, 2014;Trevor et al, 2012).…”

“…In the U.S., Executive Order 13665, which amended existing Executive Order 11246 and became effective in 2016, as well as recent laws in a growing number of states and other countries, seek to change that, driven by the belief that more transparency will reduce pay discrimination by shining a light on pay inequities. Whether pay transparency is beneficial depends on the perspective (employee, organization, societal) and circumstances (Brown et al., 2022; Colella et al., 2007; Fulmer & Arnold, 2020). Consistent with the logic above, an organization with known pay inequities may decide to avoid pay transparency.…”

Special Issue: Pay Disclosure: Implications for HRM

“…For example, New York City recently became the largest U.S. city to require private employers to disclose salary ranges in job ads, the Austrian government’s “transparency act” mandates all employers to state the minimum salaries and overpayment options in job ads, and employees in Germany have the right to request information on the average salaries of coworkers in the same job category. However, recent literature has demonstrated that the consequences/outcomes of pay transparency are complex and not universally positive, and asked for much more research on this topic (Arnold and Fulmer, 2018; Bamberger, 2021; Brown et al, 2022; Card et al, 2012; Lam et al, 2022; Marasi and Bennett, 2016).…”