Employee responses to pay transparency

Abstract

Pay transparency is often seen as a controversial topic (Birkinshaw & Cable, 2017). Companies that have disclosed information about what employees earn frequently make headlines (Loudenback, 2017), and some argue that the prevalence of online salary sharing tools such as Glassdoor.com will make pay transparency something that younger generations will simply expect of their employers (Marasi & Bennett, 2016). This trend has naturally made some employers and human resource (HR) practitioners nervous that greater transparency could expose pay inequalities, cause reputational damage or increase costs (Zenger, 2016). These potential impacts remain understudied in the academic literature, as do the potential impacts of pay transparency on various organisational outcomes such as job turnover and employee satisfaction (Smit & Montag-Smit, 2018; Trotter, Zacur, & Stickney, 2017), making it harder for employers and HR to know how to handle pay transparency.