Best not to know: Pay secrecy, employee voluntary turnover, and the conditioning effect of distributive justice

VALERIA ALTERMAN, PETER A. BAMBERGER, MO WANG, JACLYN KOOPMANN, ELENA BELOGOLOVSKY, JUNQI SHI

Research output: Contribution to journalArticlepeer-review

Abstract

Building on uncertainty management theory, we develop and test a model explicating how and when secrecy in pay communication may affect employee turnover-related outcomes (i.e., employee turnover intentions and firm voluntary turnover rates). Underlying this model is the notion that employees triangulate perceptions of pay secrecy (i.e., a pay-related procedural justice cue that also reflects uncertainty) with their own or others' perceptions of distributive justice as a basis for assessing organizational trustworthiness, with the latter serving as an important driver of voluntary turnover intentions and behavior. Results of two studies (Study 1 at the individual level and Study 2 at the firm level) indicate that, rather than being universal, the relationship between pay secrecy and turnover is contingent upon perceptions of distributive justice, with turnover intentions (at the individual level via organizational trustworthiness) and voluntary turnover rates (at the firm level) differentially affected by pay secrecy under conditions of higher and lower levels of distributive justice. These findings suggest an important extension to organizational justice theories; namely that, when procedural justice cues are confounded with uncertainty (as they are with pay secrecy), the assumed compounding interaction between procedural and distributive justice cues may be replaced by a more antagonistic interaction.

Original languageEnglish
Pages (from-to)482-508
Number of pages27
JournalAcademy of Management Journal
Volume64
Issue number2
DOIs
StatePublished - 2021

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