Date of Graduation

12-2019

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Business Administration (PhD)

Degree Level

Graduate

Department

Management

Advisor/Mentor

John E. Delery

Committee Member

Jennifer J. Kish-Gephart

Second Committee Member

Jason W. Ridge

Keywords

employee behaviors and attitudes, incentive, motivation, pay communication, pay secrecy and transparency, satisfaction, sorting

Abstract

Pay secrecy is a burgeoning debate in compensation research. On one side of the debate, it is argued that pay secrecy is a useful and beneficial practice because it can prevent potential dissatisfaction and destructive competition possible when people make unfavorable pay comparisons. On the other side, it is argued that pay secrecy is undesirable because it obscures the motivational properties of pay and does not prevent people from making pay comparisons, nor safeguard them from the resulting dissatisfaction. Despite the popularity of pay secrecy in organizations today, extant research has failed to provide any definitive answers as to whether secrecy is a beneficial pay communication practice. For both academics and practitioners, the effects of pay secrecy largely remain unclear. The current dissertation represents one attempt to address these shortcomings.

First, this dissertation seeks to clarify our comprehension of the pay secrecy construct. Toward this end, problems in existing research are outlined, including the conflation of outcomes that often occurs in pay secrecy studies. As a remedy, the incentive and sorting effects of compensation are introduced as distinct theoretical tracks for separating secrecy’s effects. The pay secrecy construct is further elucidated by building on prior work (Holtzen & Gupta, 2014) to develop a comprehensive matrix of pay secrecy.

Second, this dissertation aims to enhance and refine our understanding of the effects of pay secrecy. Using the incentive and sorting tracks, motivation and satisfaction dynamics are explored in conjunction with other relevant compensation system characteristics. This approach allows us to discern the underlying mechanisms that uniquely affect motivation/performance in the context of expectancy theory, and satisfaction/turnover in terms of equity theory principles. To provide a more nuanced examination of the unique behavioral responses to these dynamics, functional versus dysfunctional effects are explored by conceptualizing the effects as two separate continua. Within this framework, functional effects occur both when desirable behaviors are promoted and when undesirable behaviors are hindered. Conversely, dysfunctional effects manifest when desirable behaviors are hindered and when undesirable behaviors are promoted. This distinct conceptualization allows for a comprehensive examination of the extensive range of responses that secrecy may elicit.

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