Pay transparency, job turnover intentions and the mediating role of perceived organizational support and organizational justice
| DOI | https://doi.org/10.1108/ER-02-2022-0077 |
| Published date | 06 December 2022 |
| Date | 06 December 2022 |
| Pages | 162-182 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Rosanna Stofberg,Mark Bussin,Calvin M. Mabaso |
Pay transparency, job turnover
intentions and the mediating role
of perceived organizational support
and organizational justice
Rosanna Stofberg, Mark Bussin and Calvin M. Mabaso
Department of Industrial Psychology and People Management,
College of Business and Economics, University of Johannesburg,
Johannesburg, South Africa
Abstract
Purpose –Despite widespread media attention and growing interest from researchers,pay transparency
remains an under-studied field of research and its impact on organizational outcomes like job turnover is
not well understood. This study explores the impact of pay transparency on job turnover intentions
through the mediating effect of perceived organizational support (POS) and organizational justice.
Design/methodology/approach –Data from quantitative surveys conducted with 299 employees at four
South African organizations with different pay transparency practices were used to test the conceptual
model of pay transparency impacting job turnover intentions through the mediators of POS and
organizational justice.
Findings –The authors found a weak negative relationship between pay transparency and job turnover
intentions and the role of the mediating variables was confirmed. Unexpectedly, the role of the organization
emerged as a key variable. Controlling for organization type showed that the direct effect of pay transparency
on turnover intentions became insignificant, indicating a stronger effect from organizational factors, of which
pay transparency practices are just one.
Originality/value –Identifying a contextual (organizational) dimension to pay transparency practices
extends the understanding of this concept and has implications for practice. The study also makes a
methodological contribution by demonstrating the value of linking respondent data to a particular
organization when researching pay transparency.
Keywords Pay transparency, Job turnover intentions, Perceived organizational support,
Organizational justice, Pay secrecy
Paper type Research paper
Introduction
Pay transparency is a topic that has made headlines around the world, and interest in it
appears to be growing among governments, legislators and shareholder activists, in
academic research and, with employers and employees (Marasi and Bennett, 2016). Despite
this attention across different spheres, complete pay transparency is not common. A recent
survey showed that only 14% of companies offer moderate pay transparency (sharing how
ER
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© Rosanna Stofberg, Mark Bussin and Calvin M. Mabaso. Published by Emerald Publishing Limited.
This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may
reproduce, distribute, translate and create derivative works of this article (for both commercial and non-
commercial purposes), subject to full attribution to the original publication and authors. The full terms of
this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
The authors wish to thank two anonymous reviewers for their very helpful contributions.
Ethics approval: Ethics approval was granted by the University of Johannesburg Ethics Review
Committee before the research commenced.
Funding: The authors received no financial support for the research, authorship and/or publication of
this article.
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 13 February 2022
Revised 30 May 2022
9 September 2022
11 November 2022
Accepted 11 November 2022
Employee Relations: The
International Journal
Vol. 44 No. 7, 2022
pp. 162-182
Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-02-2022-0077
pay is determined and pay ranges; Ritter and Fickess, 2020). However, in the same survey,
67% of companies said they viewed pay transparency as increasingly important.
In spite of the wide coverage in the popular press, the topic of pay transparency is
relatively under-studied and the impact of pay transparency on organizational outcomes
such as employee retention is still unclear (Alterman et al.,2021;Marasi et al.,2018).
Employee retention has long been a concern for employers all over the world, because of
the costs associated with reduced productivity, loss of organizational knowledge,
recruitment of new employees and the investments in training them (Allen et al.,2010;
Lee et al., 2017).
Research into the factors which predict or mitigate the risk of employee turnover is
extensive and continues to be a focus area in academic literature (Hom et al., 2017). Although
compensation, which underpins the contractual relationship between an employer and an
employee, may be expected to have a significant influence on turnover, the academic
literature on this topic has tended to show that it has a limited to modest direct impact
(Rubenstein et al., 2018). Instead, factors like job satisfaction and organizational commitment
have been shown to have stronger effects on turnover (Griffeth et al., 2000), and there is some
evidence that pay satisfaction can be an antecedent to both of these factors (Hofmans et al.,
2013;Singh and Loncar, 2010).
In fact, various models of a more indirect, mediated, impact of compensation-related
factors on turnover have been investigated. For example, Williams et al. (2008) have argued
that satisfaction with pay procedures impacts perceptions of organizational support which in
turn reduces turnover. Griffeth et al.’s (2000) meta-analysis of turnover antecedents also
found links between pay-related variables, perceptions of fair treatment and organizational
support and, consequently with turnover and Scott et al. (2020) showed a negative correlation
between perceptions of pay fairness and turnover. Such findings indicate the possibility that
consideration of mediating factors like perceived organizational support and organizational
justice would be useful in studies of pay transparency’s impact on organizational outcomes
like turnover.
While compensation features in research on turnover, it is definitely not the dominant
factor (Sarkar, 2018). It is perhaps not surprising then that research on the impact of pay
transparency on employee turnover is extremely limited (Alterman et al.,2021). Prior
research which shows a modest impact of pay-related antecedents on turnover may
indicate that pay transparency is likely to havea similarly small effect, however research
which confirms or refutes this hypothesis is lacking. Furthermore, while scholars have
theorized about the benefits and risks associated with pay transparency (see for
example, Colella et al., 2007;Marasi and Bennett, 2016), to date, there is little empirical
evidence to support these theories. A clearer understanding of the construct of pay
transparency and its impact on organizational outcomes, like turnover, is necessary to
closethisgap.
In considering organizational-level outcomes, it is important to consider organizational-
level inputs, as argued by Shaw et al. (1998) in their organizational-level analysis of
turnover. Indeed, it is interesting to note that while pay transparency practices are defined
at an organization level, the limited studies in this field have tended to use random or
convenience samples of people without any specific connection to the pay transparency
practices those individuals experience from their employer (see for example, Alterman
et al., 2021;Smit and Montag-Smit, 2019). In this study, the impact of employee perceptions
of pay transparency on job turnover intentions is examined through the lens of the
organization that the employee is linked to. This novel approach to pay transparency
studies contributes to a fuller understanding of the impact of pay transparency on
organization-level outcomes.
Pay trans-
parency and
job turnover
intentions
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