If salaries in your workplace are secret, there’s more at stake than the frustration of thinking coworkers who produce less than you might be getting paid more.
Research by Elena Belogolovsky, assistant professor of human resource studies in Cornell University’s ILR School, indicates that pay secrecy might also hurt your work performance and prompt top talent to look for new jobs.
In a paper published online in January by the Academy of Management Journal (“Signaling in Secret: Pay for Performance and the Incentive and Sorting Effects of Pay Secrecy“), Belogolovsky and Tel Aviv University Professor Peter Bamberger explain why a lack of transparency about pay hurts an individual’s performance.
Secret payrolls weaken employee perception that a performance increase will be accompanied by a pay increase, they conclude, adding that high-performing workers are more sensitive than others when they perceive no link between performance and pay, which may hinder a firm’s ability to retain top talent.
Pay secrecy also can lead to negative behavioral consequences, such as decreased performance and increased turnover.
Source: Cornell University