Exploring secrecy in pay communication: a conceptual matrix
| DOI | https://doi.org/10.1108/ER-04-2021-0164 |
| Published date | 15 June 2022 |
| Date | 15 June 2022 |
| Pages | 1448-1466 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Sarah Holtzen |
Exploring secrecy
in pay communication:
a conceptual matrix
Sarah Holtzen
Plaster College of Business, Missouri Southern State University,
Joplin, Missouri, USA
Abstract
Purpose –The purpose of this paper is to develop a conceptual framework that clarifies the construct of pay
secrecy.
Design/methodology/approach –Paralleling 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 33 matrix with nine distinct forms of pay communication.
Findings –Drawing on the substitutability effect from the organizational justice literature, the matrix
highlights the importance of considering how the communication of different types of payinformation interact
with one another as individuals form pay perceptions.
Research limitations/implications –The 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 conceptualframework, the current manuscript is
limited by a lack of empirical testing.
Practical implications –Managers 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/value –The 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).
Keywords Pay policies, Compensation, Pay secrecy, Pay communication, Pay transparency
Paper type Research paper
Introduction
Pay matters to people. Workers use pay to fulfill food, shelter, and other basic needs. With
increasing pay comes the potential to gain social status, more time for leisure, and even early
retirement (Rynes et al., 2004). Despite its importance, pay is also a topic of conversation many
organizations prefer employees avoid. Although pay discussions are legally-protected as a
concerted employee activity (U.S. Congress, 1935;Gely and Bierman, 2003), organizations
sometimes aim to discourage employee discussions about pay. This is often achieved through
formal pay secrecy policies (Colella et al., 2007;Belogolovsky and Bamberger, 2014).
Studies suggest such polices are prevalent. Almost half of all workers in the US are
strongly discouraged or contractually forbidden from discussing pay with coworkers
ER
44,6
1448
This manuscript would not have been possible without the support of the author’s dissertation
committee. The author would like to gratefully acknowledge the guidance received from Dr Nina Gupta,
who helped the author to shape the matrix framework from just a kernel of an idea into a dissertation
project. The author is also gratefully indebted to Dr John Delery, Dr Jennifer Kish-Gephart, and Dr Jason
Ridge for the insightful feedback provided as members of the author’s dissertation committee. The
author thanks all for the guidance and support. Finally, the author would like to thank the action editor
and two anonymous reviewers who provided thoughtful feedback during the revision process.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 22 April 2021
Revised 5 February 2022
21 April 2022
30 May 2022
Accepted 31 May 2022
Employee Relations: The
International Journal
Vol. 44 No. 6, 2022
pp. 1448-1466
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-04-2021-0164
(IWPR, 2011). Managers and organizations generally support secrecy, claiming it minimizes
social comparisons and destructive competition among employees (Burroughs, 1982). Even
employees themselves may favor secrecy. For workers in the US, the taboo nature of
discussing pay is a deep-seated belief, evidenced by the “squirm factor”(Lytle, 2014, p. 30)
that often accompanies compensation discussions. Together, these complementary forces
have created an environment in which the communication of pay information is frequently
shrouded in secrecy.
Despite its widespread use and acceptance, secrecy in the communication of pay
information is not well-understood. On the one hand, evidence suggests that even when
organizations choose to limit the sharing of formal pay information, employees still discuss
pay (Day, 2012), though they may form grossly incorrect assumptions about others’pay
amounts (Lawler, 1965,1966,1967;Milkovich and Anderson, 1972). On the other hand,
transparency in pay communication can elicit strong feelings of envy toward higher-paid
others (Bamberger and Belogolovsky, 2017). Recent publications in academic (e.g. Bamberger
and Belogolovsky, 2017;Marasi et al., 2018;Scheller and Harrison, 2018;Smit and Montag-
Smit, 2018a,b) and practitioner outlets (e.g. Lytle, 2014;Trotter et al., 2017) suggest a growing
need to understand how pay information is communicated. However, theoretical
developments have failed to keep pace with empirical investigations.
Toward that end, this manuscript represents one attempt at exploring the theoretical
underpinnings of the pay secrecy construct. In particular, efforts are directed at mapping the
information content and structure of the construct. To properly position the current paper in
relation to the extant literature, prior conceptualizations of the construct are first explored.
Next, concepts from equity theory (Adams, 1965) and the organizational justice literature are
used to construct a matrix of pay information (Holtzen and Gupta, 2014). The matrix cells are
then presented as a framework for understanding the nine distinct forms of pay secrecy that
emerge from the intersection of two types of pay information. Finally, the paper concludes
with a discussion of how the matrix framework may be used to further our understanding of
secrecy in the communication of pay information.
Elucidating the pay secrecy construct
Employee compensation is “complex and often confusing”(Gerhart and Rynes, 2003, p. 1).
Not only do compensation strategies and practices vary across organizations (Gerhart and
Milkovich, 1990), but employee perceptions of these practices may vary widely as well. For
example, compensation may be viewed as a return in exchange for the work performed, a
reward for a job well done, or as an entitlement for being an organizational member
(Milkovich et al., 2014). Broadly defined, employee compensation represents “all forms of
financial returns and tangible services and benefits employees receive as part of an
employment relationship”(Milkovich et al., 2014, p. 13).
The communication of information about these different compensation elements is
similarly complex. For example, scholars have operationalized pay transparency as ranging
from sharing information on pay scales (Lawler, 1965,1966), to sharing information about
low, high, and average merit raise amounts, as well as salary levels based on tenure (Futrell
and Jenkins, 1978), to sharing compensation ranges and midpoints for adjacent managerial
levels (Mahoney and Weitzel, 1978). Though much of the pay communication literature has
focused on pay outcomes of direct cash compensation elements (e.g. base pay, Day, 2012;
performance bonuses, Belogolovsky and Bamberger, 2014), more recent work has expanded
to include benefits. For example, Arnold et al. (2018) measured transparency in the
communication of four pay practices: benefits, base pay, pay raises, and variable pay.
Surveys of management practitioners reflect further differences in the extent to which pay
information is formally communicated. In the IWPR (2011) survey, policies restricting the
Secrecy in pay
communication
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