MONDAY, March 10, 2014 (HealthDay News) -- Keeping salaries secret hurts worker performance and increases turnover of top talent, according to a study published online Jan. 13 in the Academy of Management Journal.
Elena Belogolovsky, Ph.D., from Cornell University in Ithaca, N.Y., and Peter A. Bamberger, Ph.D., from the Recanati Business School of Tel Aviv University in Israel, developed and tested a model of the incentive and sorting effects of pay secrecy. Pay secrecy is a communication policy that limits employees' access to pay-related information and discourages the discussion of pay issues under varying pay-for-performance (PFP) system characteristics.
The researchers found that the results support the proposed moderated-mediation model. Pay secrecy has an adverse impact on individual task performance. This effect is lessened by PFP perceptions when performance assessment is objective (as opposed to subjective). The effect is intensified when pay determination criteria are relative (as opposed to absolute). Pay secrecy also has a similar adverse effect on participant continuation intentions (which is weakened through PFP perceptions and when performance assessment is objective, and is amplified when pay determination criteria are relative), particularly among high performers.
"These findings suggest that weak signals associated with a particular managerial practice may become salient when interpreted in the context of other practice-based signals, and that under such conditions, even weak signals may drive negative-oriented inferences having important behavioral implications," the authors write.
Abstract
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