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Pay Transparency: Advancing Theory and Empirical Knowledge

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r Academy of Management Journal
2021, Vol. 64, No. 2, 482–508. Cite Article
https://doi.org/10.5465/amj.2019.0231

BEST NOT TO KNOW: PAY SECRECY, EMPLOYEE

VOLUNTARY TURNOVER, AND THE CONDITIONING
EFFECT OF DISTRIBUTIVE JUSTICE
VALERIA ALTERMAN
University of Miami

PETER A. BAMBERGER
Tel Aviv University

MO WANG
University of Florida

JACLYN KOOPMANN
Auburn University

ELENA BELOGOLOVSKY

JUNQI SHI
Zhejiang University

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) differen-
tially 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 dis-
tributive justice cues may be replaced by a more antagonistic interaction.

The relationship between pay and human capital retain the human capital critical for organizational
resources is well established in the compensation effectiveness (Milkovich, Newman, & Gerhart, 2013;
literature, with pay mix, level, and structure serving Nyberg, 2010; Shaw, 2014). For example, studies
as important levers by which employers attract and indicate that companies that position their pay

The first two authors contributed equally to the manu-
script. The contribution of Peter Bamberger was supported
by a grant from the Henry Crown Institute for Business
Research, Tel Aviv University. The contribution of Mo
Wang was supported in part by the Lanzillotti-McKethan
Eminent Scholar Endowment. This research was sup-
ported in part by Grant No. 71425004 awarded to Junqi
Shi from the Natural Science Foundation of China. We
would like to thank Ingrid Fulmer, Ingo Weller, and
Batia M. Wiesenfeld for their helpful comments on an
earlier version of this manuscript. Correspondence con-
cerning this article should be addressed to Junqi Shi,
School of Management, Zhejiang University (Zijingang
Campus), 866 Yuhangtang Road, Hangzhou, Zhejiang
Province, 310058, P.R. China. E-mail: shijunqi@zju.
edu.cn

482
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2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
below market rates may have difficulty retaining
employees (Shaw, Delery, Jenkins, & Gupta, 1998;
Singh & Loncar, 2010). However, in contrast to
our understanding of how pay mix, level, and
structure may influence such voluntary turnover
(i.e., “instances wherein management agrees that the
employee had the physical opportunity to continue
employment with the company at the time of termi-
nation” [Maertz & Campion, 1998: 5]), we know little
about the impact of “pay secrecy practices”
(i.e., practices and policies relating to the degree of
transparency of pay levels, pay-related procedures,
and the ability of employees to disclose pay-related
information to one another [Colella, Paetzold,
Zardkoohi, & Wesson, 2007; Fulmer & Chen, 2014])
on voluntary turnover.1
This is problematic because pay communication
practices, such as secrecy, serve as a key mechanism
by which employee pay perceptions are shaped
(Belogolovsky & Bamberger, 2014). In particular,
previous research suggests that pay secrecy, by cre-
ating a situation of information asymmetry, poten-
tially drives employee inferences that pay-related
procedures are unfair (i.e., reflects a low level of
procedural justice; Colella et al., 2007; Greenberg &
McCarty, 1990; Smit & Montag-Smit, 2019). As such,
more secretive pay practices may be positively
linked to voluntary turnover, in that, the more em-
ployees doubt the degree to which their employers
treat them fairly, the more likely they may be to
consider employment alternatives (Belogolovsky &
Bamberger, 2014; Singh & Loncar, 2010). Despite the
intuitive appeal of such an argument, there is little
evidence that pay secrecy drives employee turnover.
Indeed, were it to do so, one would expect most
employers to adopt more transparent pay systems.
But the fact of the matter is that, with the exception of
a handful of high-profile cases, such as Whole Foods,
pay communication practices in the majority of pri-
vate sector firms remain largely secretive (Institute
for Women’s Policy Research, 2017). Further, in one
of the few empirical studies of pay secrecy and em-
ployee turnover, Card, Mas, Moretti, and Saez (2012)
found less pay secrecy (i.e., greater transparency) to
be related to more job search and turnover, particu-
larly for those earning below-median pay rates.
1
For ease of writing and to better map to previous pre-
dominantly experimental work on pay secrecy versus pay
transparency conditions (e.g., Bamberger & Belogolovsky,
2010), we use the term “pay transparency” to reflect lower
levels of or the opposite of pay secrecy.
483
Given that turnover can be extremely costly to or-
ganizations (Dess & Shaw, 2001; Park & Shaw, 2013),
there is both theoretical and practical merit to
addressing this anomaly. Theoretically, there is
value in explicating not just whether but also how
and when pay secrecy may link to voluntary turn-
over. We focus on voluntary turnover (i.e., quits),
which is fundamentally different from and has
different antecedents than involuntary turnover
(i.e., dismissals) (Batt & Colvin, 2011). As Batt and
Colvin (2011: 695) pointed out, “quits are seen as the
outcome of a relatively rational process in which
employees weigh their current job against alternative
prospects.” Hence, our focus on voluntary turnover
reflects our interest in helping explain the impact
of pay secrecy on employees’ turnover-related deci-
sions. Understanding this relationship may offer
valuable insight into how secrecy across a range of
organizational practices may affect the retention of
human capital. Practically, assessing whether,
when, and how pay secrecy may influence voluntary
turnover could provide valuable insight into the
potential unintended negative consequences of
choosing more pay transparency, and thus help
leaders make more informed decisions regarding
their organizations’ pay communication practices.
Psychologists offer a logical explanation for the
mixed findings on the relation between pay secrecy
and turnover, suggesting that employee behavior
cannot be predicted on the basis of one justice cue
alone (Folger, 1987; Shapiro, 1991). For example,
Cropanzano and Folger (1991) argued that, to com-
pletely understand fairness reactions, one should
study the interaction between justice cues related to
both outcomes and procedures, because employees
likely react most negatively to the combination of
low procedural justice (i.e., the degree to which
procedures used to determine outcomes are just—
e.g., procedures that are bias-free, consistent, and
provide voice) and low distributive justice (i.e., the
degree to which rewards and outcomes are equitably
distributed; Colquitt, 2001).2 Indeed, in a review of
45 independent samples, Brockner and Wiesenfeld
2
Throughout the paper, we use the terms “fairness” and
“justice” somewhat interchangeably, to be consistent with
our theoretical framing based on fairness-related heuristics
(i.e., uncertainty management theory). However, consis-
tent with Goldman and Cropanzano (2015), when we use
the term “fairness” alone, we are referring to the reaction to
or evaluation of justice, and, when we use the term “jus-
tice,” we are referring to the normative conduct that elicits
fairness reactions.
484 Academy of Management Journal
(1996: 191) found that, relative to all other combi-
nations, the condition of low distributive justice and
low procedural justice “engenders particularly neg-
ative reactions.” Applying their findings to consider
the pay secrecy–turnover relationship, this would
suggest that, all else equal, the highest levels of em-
ployee turnover are likely when a high level of pay
secrecy, reflecting low pay-related procedural jus-
tice, is accompanied by low distributive justice
(i.e., a compounding interaction).
In this paper, however, we argue and demonstrate
that, despite their intuitive appeal, in the case of pay
secrecy, justice theories proposing a compounding
interaction between these cues may not be sup-
ported, because pay secrecy conflates the procedural
justice cue with uncertainty, making any negative
procedural justice perception more ambiguous.
Rather, under conditions of low distributive justice,
despite providing a potentially negative procedural
justice cue, the uncertainty associated with a higher
degree of pay secrecy may help employees maintain
their trust in employers, which is more conducive to
employee retention, versus a lower degree of pay
secrecy, which reflects a more positive and certain
procedural justice cue. Accordingly, we expect a
positive pay secrecy–trust relationship when dis-
tributive justice is low. We also argue that, when
distributive justice is high, lower pay secrecy
(i.e., higher transparency) and its associated cer-
tainty regarding pay-related procedural justice may
elicit stronger positive trust reactions (and, hence,
greater employee retention) than higher pay secrecy.
Thus, a negative pay secrecy–trust relationship
would emerge when distributive justice is high. In
this sense, the model we propose not only explains
when and how pay secrecy may link to turnover-
related outcomes, but also offers an important extension
to justice theories by considering that fairness-related
uncertainty conflates with the procedural justice cue in
the pay secrecy construct.
We base our arguments on uncertainty manage-
ment theory (UMT) (van den Bos & Lind, 2002).
Consistent with the justice literature reviewed
above, UMT suggests that individuals tend to trian-
gulate across multiple justice cues. However, UMT
suggests that distributive justice will not moderate
procedural justice relationships with outcomes in a
similar manner as justice theories predict when the
procedural justice cue is also uncertain. Indeed, the
theory suggests that, when some fairness informa-
tion is uncertain (as is the case under conditions of
greater pay secrecy), individuals rely on uncertainty-
related fairness heuristics (i.e., cognitive biases that
April
arise when justice cues are uncertain), such as status
quo preservation heuristics, to form a global fairness
assessment of how well they are being treated. In
particular, consistent with systems justification the-
ory (Jost, 1995), UMT explains that status quo pres-
ervation heuristics occur as “people try to justify
rather than challenge the existing status quo” when
there is fairness uncertainty (van den Bos & Lind,
2002: 48), or, in other words, tend to dismiss or deny
more aversive justice cues in the absence of hard ev-
idence that they are being treated unfairly. This ten-
dency to discount fairness information (i.e., justice
cues) is particularly relevant when the fairness un-
certainty is also explicit, as is very likely the case with
pay secrecy (i.e., employees are aware that pay in-
formation and conversations are being withheld or
restricted; Colella et al., 2007). Accordingly, we argue
that, because of the known information asymmetries
it creates, pay secrecy is associated with a discounting
of aversive fairness information when triangulated
with other justice cues (i.e., distributive justice in this
study). Thus, for example, although pay secrecy may
suggest potential employer procedural unfairness,
even when employees also experience the condition
of low distributive justice, they may not necessarily
draw inferences of particularly low organizational
trustworthiness (defined as “the expectation that an
actor [the organization] will act in the interests of the
other [its employees]” [Mayer, Davis, & Schoorman,
1995: 712]), which reflects the global or overall fair-
ness assessment in our study, because they have only
partial certainty about the unfair treatment. Yet, to the
degree that inferences of organizational distrust are
drawn, we propose that such inferences may in turn
drive turnover intentions and voluntary turnover.
Our theorizing and findings, consistent with UMT,
offer several contributions to the justice and com-
pensation literatures. First, they suggest that, when
there is a negative procedural justice cue but also
uncertainty about procedural fairness, distributive
justice’s moderating effects will not manifest in an
identical form to traditional justice theory predic-
tions. Instead, our theorizing suggests that the pro-
cedures themselves can conflate potential unfairness
with uncertainty, triggering uncertainty-related
fairness heuristics that need to be considered in or-
der to understand the nature of the interaction. Sec-
ond, they highlight the critical role of employee trust
in the organization as a global fairness judgment
mechanism linking pay secrecy with employee be-
havior and turnover in particular. As UMT (Lind,
2001: 67) proposes, “fairness judgments are used as a
surrogate for . . . trust.” Consistent with this idea, our
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
findings indicate that trust in employers is an im-
portant consequence of the joint assessment of justice
cues (i.e., pay secrecy and distributive justice in this
study) following uncertainty-related fairness heuris-
tics (e.g., status quo preservation). Overall, our theo-
rizing and findings offer a more nuanced perspective
on the link between pay secrecy and voluntary turn-
over, highlighting that pay secrecy practices that in-
dicate both unfairness and uncertainty can bias how
employees integrate justice information when draw-
ing conclusions about organizational trustworthiness,
which ultimately shapes turnover-related outcomes.
We test our UMT-based hypotheses in two studies.
In Study 1, we test our employee-level prediction
that the interaction between pay secrecy and dis-
tributive justice perceptions affect turnover inten-
tions via organizational trust, using a sample of 196
working MBA students and a time-lagged research
design. In Study 2, to assess the generalizability of
these relations to the firm level, we examined the
interactive effects of manager-assessed pay secrecy
practices and distributive justice climate on firm-
level voluntary turnover rates in 86 firms.
LITERATURE REVIEW AND
THEORETICAL DEVELOPMENT
Pay Secrecy and Employee Turnover
There has been a continuing trend toward, as well
as recent regulatory and policy-level movement in
favor of, less secretive pay systems characterized by
greater sharing of pay information by organizations
with employees and the removal of restrictions on
employees’ ability to share pay information with one
another (Colella et al., 2007; Marasi & Bennett, 2016).
For example, in the United States, the National Labor
Relations Act states that firms cannot prohibit their
employees from discussing their compensation with
each other (Gely & Bierman, 2003). Furthermore, Ex-
ecutive Order 13665 (affecting approximately 20% of
the U.S. labor force) prohibits contractors from dis-
criminating against employees for talking about pay
and requires contractors to allow their employees to
freely discuss their own compensation with others
(Adams, 2017; Trotter, Zacur, & Stickney, 2017).
Similarly, in an effort to reduce gender pay gaps,
several countries (e.g., Denmark, Germany) have
passed legislation requiring employers to make pay
more transparent (Bennedsen, Simintzi, Tsoutsoura,
& Wolfenzon, 2019; Salary.com, 2018). Still, only 6%
of the over 700 North American organizations
responding to a 2018 PayScale survey reported
485
providing employees access to actual pay rates and
data, with only an additional 7% providing informa-
tion on pay procedures, and 17% sharing some in-
formation on pay ranges (PayScale, 2018).
Paralleling this shift in pay communication policy
and practice is increased interest in the issue of pay
secrecy on the part of scholars, with researchers study-
ing the impact of one or more of three distinct dimen-
sions of pay secrecy, which is lower (higher) when these
components are more (less) strongly endorsed (Arnold,
Fulmer, Sender, Allen, & Staffelbach, 2018; Fulmer &
Chen, 2014; Smit & Montag-Smit, 2018, 2019); namely,
(a) procedural pay transparency—the degree to which
the organization shares information regarding how
pay is determined; (b) distributive pay transparency
or disclosure of pay—the degree to which the orga-
nization discloses actual pay levels of individual
employees or employee groups to its workforce; and
(c) communication openness transparency—the de-
gree to which the organization allows employees to
discuss personal pay matters with one another. On the
one hand, this research suggests that pay transpar-
ency (i.e., the opposite of secrecy) has largely benefi-
cial implications with respect to individual task
performance (Bamberger & Belogolovsky, 2010;
Belogolovsky & Bamberger, 2014; Greiner, Ockenfels,
& Werner, 2012; Tremblay & Chênevert, 2008), help-
seeking (Belogolovsky, Bamberger, Alterman, &
Wagner, 2016), and gender pay gap size (Bennedsen
et al., 2019). On the other hand, pay transparency
(relative to secrecy) has also been associated with in-
creased envy toward, and a lower tendency to provide
unsolicited helping to, coworkers (Bamberger &
Belogolovsky, 2017); increased privacy and social
concerns (Smit & Montag-Smit, 2019); and greater pay
compression (Mas, 2017). Research on the association
between pay secrecy and employee turnover is,
however, both limited and equivocal, with some
studies suggesting that, relative to pay transparency,
pay secrecy is positively associated with turnover
(Belogolovsky & Bamberger, 2014; Mulvey, LeBlanc,
Heneman, & McInerney, 2002), and others suggesting
an inverse (Card et al., 2012) or null effect (Bennedsen
et al., 2019).
Underlying much of the theorizing on the conse-
quences of pay secrecy have been justice theories.
Specifically, scholars have argued that the informa-
tion asymmetry in employer–employee relations
caused by pay secrecy will lead to negative proce-
dural fairness judgments, because it “restricts em-
ployee voice, permits inferences of bias, and suggests
that decision making about pay may be done with-
out accurate information” (Colella et al., 2007: 59).
486 Academy of Management Journal
Furthermore, such negative inferences may drive
intentions to leave or actual withdrawal in that, as
noted by Colella et al. (2007: 59), “when treated un-
fairly [employees] may take a defensive stance in an
attempt to avoid exploitation.” However, the uncer-
tainty inherent to pay secrecy may make it difficult
for employees to be sure of their unfair treatment,
and recent research suggests that some employees
may even see benefits in such information asym-
metry, such as the protection of privacy (Smit &
Montag-Smit, 2018, 2019). As such and given the
equivocal findings, it seems that the negative main
effect predictions suggested by prior pay secrecy
research may be insufficient for fully understanding
the pay secrecy–turnover relationship.
Consideration of Uncertainty and Trust: UMT
Although justice theories (for a review, see Brockner
& Wiesenfeld, 1996) also offer a more complex pre-
diction (i.e., strongest adverse effect most likely ob-
served at low–low combinations of justice cues), we
contend that these theories omit a key consideration
when pay secrecy is the procedural justice cue. For
example, Scheller and Harrison (2018) proposed the
interaction of pay transparency and organizational
justice (i.e., distributive and informational), but did not
consider the role of uncertainty embedded in low
levels of pay transparency. Accordingly, we propose
that, because pay secrecy conflates the justice cue with
uncertainty, this initial work on the triangulation of
(procedural and distributive) justice cues cannot offer a
comprehensive explanation for the pay secrecy–
turnover relation. Instead, we suggest that uncertainty-
related fairness heuristics (e.g., status quo preservation)
will be triggered when distributive justice conditions
are jointly evaluated with pay secrecy.
Accordingly, we draw from van den Bos and Lind’s
(2002) UMT, which offers a more comprehensive basis
for modeling how “pay secrecy perceptions” (defined
as employees’ subjective assessments of the degree to
which access to and discussion of pay-related infor-
mation is restricted by the organization) and practices
may link to turnover-related outcomes through
uncertainty-related fairness heuristics. To elaborate,
UMT proposes that, under conditions of uncertainty,
fairness judgments become highly salient, because
they reflect a global assessment or overall impression
of how well one is being treated by an authority
(e.g., the organization), thus having important impli-
cations for one’s self-image, self-esteem, and sense of
control. Indeed, van den Bos and Lind (2002: 9) noted,
“fairness matters most to people when they are
April
uncertain about a social authority’s trustworthiness.”
As such, the theory suggests that employees’ percep-
tions of organizational trustworthiness serve as a
proxy for the global fairness judgment. More specifi-
cally, UMT (van den Bos & Lind, 2002) suggests that
organizational trustworthiness is a central concern to
employees, in that the employment relationship typ-
ically demands ceding authority to the employer, thus
opening the possibility of employer exploitation and
opportunism.
As others in the pay secrecy literature (Belogolovsky
& Bamberger, 2014) have noted, when pay is more se-
cretive, not only may resulting pay-related uncer-
tainties heighten the salience of these fairness
assessments (i.e., trust, in the case of the current study),
but the fact that the information asymmetries are em-
ployer imposed may also drive negative fairness as-
sessments regarding the employer and their intent
surrounding pay procedures (Colella et al., 2007). That
is, despite the fact that employees know little or noth-
ing about the objective fairness of pay procedures and
reward allocation when pay is more secretive, secrecy
itself may be sufficient to heighten concerns about
employer opportunism, casting doubts over employee-
perceived trust in one’s employer (Baumeister,
Bratslavsky, Finkenauer, & Vohs, 2001; Kramer &
Messick, 1998). As such, UMT and pay secrecy re-
search both highlight that employee perceptions of
organizational trustworthiness may serve as a key
fairness judgment linking pay secrecy to turnover-
related outcomes. Indeed, UMT (van den Bos & Lind,
2002: 30) suggests that such fairness judgments are
highly robust, in that, once they have been established,
they “serve as a heuristic for interpreting subsequent
events.” Accordingly, they can potentially elicit a
downward spiral in trust, with pay secrecy-based
mistrust representing employee interpretations of the
fairness of a wide range of other employer decisions.
To the degree that pay secrecy-based mistrust is gen-
eralized to other situations, it may create a situation in
which the utility of seeking and securing alternative
employment outweighs the potential risks of doing so
(Hirschman, 1970). Consistent with such logic, Bijlsma
and Koopman’s (2003) meta-analysis indicated a pos-
itive relationship between organizational trust and
one’s loyalty to their organization, as well as a negative
relationship with turnover intentions.
In contrast to this main effect prediction, however,
UMT further proposes that an antagonistic interac-
tion between procedural and distributive justice
cues may be more likely in terms of predicting trust
assessments and turnover when one cue is also un-
certain (as is the case with pay secrecy). Specifically,
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
UMT argues that individuals may be unable to make
informed fairness or trust assessments without con-
sidering an additional certain justice cue. However,
when this alternative justice cue (i.e., distributive jus-
tice in the case of the current study) is considered,
uncertainty-related fairness heuristics may emerge in
the processing of fairness information. More specifi-
cally, consistent with systems justification theory (Jost,
1995), UMT suggests that, when distributive justice is
considered alongside pay secrecy, status quo preser-
vation is triggered, with employees more likely dis-
missing aversive fairness information because
attributions of unfairness suggest a lack of control,
which in turn can lower one’s self-esteem and self-
efficacy and be a direct affront to one’s self-image (van
den Bos & Lind, 2002), thus eliciting more middle-of-
the-road fairness judgments (i.e., trust). In contrast,
per UMT, consistent with another uncertainty-related
heuristic, the certainty effect (Kahneman & Tversky,
1979)—that is, the heuristic to overweight outcomes
that are certain relative to those that are probable—
when pay is more transparent (i.e., less secretive), the
vivid content of that information may make it difficult
for employees to deny fair or unfair treatment infor-
mation (Bamberger & Belogolovsky, 2017), thus gen-
erating commensurate fairness judgments.
Accordingly, under conditions of low distributive
justice perceptions, the uncertainty associated with
higher pay secrecy is likely to preserve trust levels
more as compared to pay transparency (i.e., greater
certainty about the pay process and its fairness). To
elaborate, because individuals want to protect their
self-esteem and self-image, the uncertainty of pay
secrecy results in status quo preservation heuristics
when assessing fairness information (van den Bos &
Lind, 2002). That is, to preserve their self-image from
declining due to the affront of unfairness, individ-
uals will dismiss or discount the aversive fairness
information gleaned from low distributive justice
perceptions when there is greater uncertainty in
perceived pay procedures and their fairness
(i.e., high pay secrecy). In contrast, when pay secrecy
is low, the certainty effect suggests that individuals
are less likely to be able to deny aversive justice cues
(e.g., low distributive justice), because there is con-
crete evidence of unfairness that validates low dis-
tributive justice perceptions, resulting in lower trust
levels under pay transparency versus pay secrecy.
Thus, when distributive justice perceptions are low,
we expect that the relationship between pay secrecy
perceptions and organizational trust will be positive,
with higher levels of pay secrecy (vs. transparency)
perceptions associated with higher trust.
487
In contrast, under conditions of high distributive jus-
tice perceptions, we contend that less pay secrecy
(i.e., more transparency) of such fair pay is likely to result
in higher trust in the organization. Specifically, due to
the certainty effect, individuals are more likely to over-
weight or put stock in their higher perceptions of pay
fairness (i.e., high distributive justice) when the proce-
dures to determine pay are open and clear. Thus,
consistent with Brockner’s (2002: 59) assertion that
“perceptions of greater fairness lead people to be more
trusting of the other party,” this certainty effect would
lead to relatively high trust reactions. In contrast, while
high distributive fairness perceptions may temper the
inferences of employer’s ill intent stemming from the
perception of more secretive pay practices, because
these outcome-based inferences are less confirmable in
the context of pay secrecy, the uncertainty surrounding
them is likely to result in a more muted trust reaction.
Ultimately, this results in relatively lower levels of em-
ployee trust in their organization. The net impact of these
dynamics is that an inverse association between per-
ceptions of pay secrecy and organizational trust should
exist when distributive justice perceptions are high.
The theorizing above therefore suggests the following
individual-level hypothesis:
Hypothesis 1. Distributive justice perceptions mod-
erate the relationship between pay secrecy percep-
tions and organizational trust, such that, in the
context of high distributive justice perceptions, the
effect of pay secrecy perceptions on organizational
trust is negative, but, in the context of low distributive
justice perceptions, the effect of pay secrecy percep-
tions on organizational trust is positive.
Moreover, given that we argued that the triangu-
lation of these justice-related cues likely links to
turnover-related outcomes by influencing organiza-
tional trust, as shown in Figure 1, we propose:
Hypothesis 2. Distributive justice perceptions moder-
ate the indirect effect of pay secrecy perceptions on
turnover intentions via organizational trust, such that,
in the context of high distributive justice perceptions,
the indirect effect of pay secrecy perceptions on turn-
over intentions via organizational trust is positive, but,
in the context of low distributive justice perceptions,
the indirect effect of pay secrecy perceptions on turn-
over intentions via organizational trust is negative.
Pay Secrecy Practices and Voluntary Turnover
Rates: Generalizing to the Firm Level
If pay secrecy and distributive justice perceptions
interact to influence turnover intentions at the
488 Academy of Management Journal
individual level, to what degree might we expect pay
secrecy practices to interact with “distributive justice
climate” (i.e., “shared perceptions of reward and
resource distribution fairness” [Whitman, Caleo,
Carpenter, Horner, & Bernerth, 2012: 778]) in influ-
encing actual voluntary turnover rates at the level of
the firm? After all, it is at the firm level that pay secrecy
may take an economic toll if such practices indeed
affect turnover rates. Thus, although our individual-
level theorizing can inform the mechanisms at play at
the firm level, it is important to investigate the actual
firm-level variables that manifest from the individual
level to expand our theoretical understanding of pay
secrecy–turnover relations. Accordingly, we argue that
distributive justice climate offers the relevant justice
cue that is triangulated with pay secrecy practices at
the firm level and can provide us insight into firm ag-
gregated voluntary turnover rates.
On the one hand, claims that individual-level rela-
tions generalize up to the firm level should always be
taken with a grain of salt, due to the ecological fallacy
(Kozlowski & Klein, 2000). In particular, individual
perceptions of pay secrecy and distributive justice are
more proximate to individual turnover intentions than
actual administrative practices and organizational cli-
mates are to voluntary turnover behavior or aggregated
voluntary turnover rates. Indeed, while actual pay se-
crecy practices can be expected to perhaps most directly
shape pay secrecy perceptions, UMT (Lind, 2001) sug-
gests that a variety of other individual and situational
factors may also play a role in shaping such perceptions.
Accordingly, turnover-related outcomes may be more
weakly associated with pay secrecy practices than pay
secrecy perceptions. Furthermore, while turnover in-
tentions are highly correlated with actual turnover be-
havior (Jiang, Liu, McKay, Lee, & Mitchell, 2012), there
are fewer risks associated with turnover intentions than
with actual voluntary turnover behavior. Thus, while
turnover intentions may be sensitive to pay secrecy,
actual voluntary turnover may not be. That is, although
distributive justice perceptions may condition the rela-
tionship between pay secrecy perceptions and turnover
intentions, this conditioning role may be less salient with
respect to the link between pay secrecy practice and
actual voluntary turnover.
On the other hand, prior research and UMT would
suggest that the same interaction effect (between pay
secrecy and distributive justice perceptions) on turn-
over intentions posited in Hypothesis 1 should manifest
with respect to the firm-level interaction effect of pay
secrecy practice and distributive justice climate on
voluntary turnover rate. More specifically, previous re-
search at the firm level indicates that pay-related human
April
resources (HR) practices are associated with voluntary
turnover (Nyberg, 2010; Shaw et al., 1998). In particular,
employees tend to remain with their organizations as
long as pay-related HR practices serve their interest.
However, if organizations endorse pay secrecy, as sug-
gested by Colella et al. (2007), employees may be less
certain that these pay-related practices indeed serve
their interests. In that regard, pay secrecy practices may
create the kind of procedural fairness uncertainty that
UMT suggests biases how justice cues are processed.
Building on the UMT notion that individuals may also
consider justice context (e.g., peer assessments of out-
come fairness; see also theories that similarly emphasize
collective sensemaking among employees yielding
shared justice climate emergence and effects—Li &
Cropanzano, 2009; Li, Cropanzano, & Molina, 2015)
when forming fairness judgments, we propose that, at
the firm level, distributive justice climate provides the
context in which inferences may be drawn about the
pay fairness and stimulate shared UMT-based uncer-
tainty heuristics. Accordingly, distributive justice cli-
mate is likely to moderate the relationship between pay
secrecy practice and firm-level voluntary turnover, with
the form of this interaction at the firm level being similar
to that suggested earlier at the individual level.
In particular, in firms with a low distributive justice
climate, the uncertainty of pay secrecy practices, and
thus pay-specific procedural fairness, may result in sta-
tus quo preservation heuristics that make their em-
ployees likely to discount the self-image threatening
unfairness cues prevalent in such climates. Accordingly,
pay secrecy practices may protect firms with lower dis-
tributive justice climate from elevated employee volun-
tary turnover rates. In contrast, in firms with a low
distributive justice climate, less secretive pay practices
(i.e., greater certainty concerning pay-related procedural
fairness) may make it difficult for employees to dismiss
aversive contextual cues embedded in such climates,
resulting in poorer fairness assessments and ultimately
higher voluntary turnover rates. In other words, we argue
that firm pay secrecy practices will be negatively linked
to voluntary turnover rates when firms have lower dis-
tributive justice climates.
Alternatively, when firms have high distributive
justice climates, less secretive pay practices ought to
be more beneficial for reducing firm voluntary turn-
over rates. Specifically, the combination of pay-
related fairness cues experienced in such climates
along with greater certainty regarding pay-related
procedural fairness may make employees more likely
to stay because they have direct, confirmatory evi-
dence of their fairer pay-related treatment (i.e., the
certainty effect). In contrast, even when firms have a
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
FIGURE 1
Study 1: Hypothesized Model for Testing the Moderated Mediation of Distributive Justice on the Relationship
between Pay Secrecy Perceptions and Turnover Intentions via Organizational Trust (Employee Level)
Distributive
justice
Hypothesis 1
Pay secrecy Organizational
perceptions
Hypothesis 2
higher distributive justice climate, more secretive pay
practices (and the procedural fairness uncertainty
they introduce) can muddy employees’ perceptions of
whether they are indeed receiving fair pay-related
treatment, generating greater doubt about their fair
treatment related to pay. Such uncertainty can po-
tentially result in higher voluntary turnover rates as
compared to when firms practice less pay secrecy in
this distributive justice condition. In sum, we expect
that pay secrecy practices will be positively linked to
voluntary turnover rates when firms have high dis-
tributive justice climates. Therefore, as depicted in
Figure 2, we posit:
Hypothesis 3. Distributive justice climate moderates
the relationship between pay secrecy practice and
firm voluntary turnover rate, such that, when dis-
tributive justice climate is high, the relationship
between pay secrecy practice and firm voluntary
turnover rate is positive, but, when distributive jus-
tice climate is low, the relationship between pay se-
crecy practice and firm voluntary turnover rate is
negative.
We test Hypotheses 1 and 2 (at the individual level) in
Study 1, and Hypothesis 3 (at the firm level) in Study 2.
STUDY 1
Sample and Procedure
Participants were employed students enrolled in an
executive MBA program at a large university in southern
China. We chose working executive MBA students as
our focal sample because they likely have sufficient or-
ganizational tenure to have fully developed their per-
ceptions of pay secrecy, organizational trust, and
turnover intentions. Participation was voluntary, and all
participants received personalized developmental feed-
back reports and a small payment (15 Chinese Yuan) as a
489
Turnover
trust intentions
Hypothesis 2
token of appreciation for taking part in this study. Our
variables of interest were measured through paper sur-
veys administrated in two waves, with each wave sepa-
rated by a one-month interval. Specifically, the control
variables and independent and moderator variables
(i.e., pay secrecy and distributive justice perceptions)
were measured in Wave 1. The mediator and dependent
variables (i.e., organizational trust and turnover inten-
tions) were measured a month later, in Wave 2. Of the
231 students surveyed, we received responses from 196
participants, for a response rate of 84.85%. Participants’
average age was 32.14 years old (SD 5 6.21), and their
average organizational tenure was 4.53 years (SD 5 4.79).
The majority of the sample (64.30%) was female,
employed in such fields as medicine, manufacturing,
education, and banking. All surveys were conducted
in Chinese. A translation-back translation procedure
(Brislin, 1970) was followed to ensure the accuracy of the
translation of the English-based measures into Chinese.
Measures
Pay secrecy perceptions. Pay secrecy perceptions
were measured using five items capturing two main
components of pay transparency; namely, “procedural
transparency” (i.e., the degree to which the organization
provides information regarding how pay is determined)
and “communication openness” (i.e., the degree to
which the organization allows employees to discuss pay
matters with one another or disclose their personal pay
matters to others; Arnold et al., 2018). We did not assess
the third potential component (i.e., pay level transpar-
ency) given that, as in North America (PayScale, 2018),
such practice is extremely rare in China (Yang, Yang, &
Cao, 2008). Although most empirical research has relied
on manipulating pay secrecy conditions in the lab
(e.g., Bamberger & Belogolovsky, 2017; Belogolovsky &
Bamberger, 2014), several pay secrecy scales have been
490 Academy of Management Journal
FIGURE 2
Study 2: Hypothesized Model for Testing the Effect of Pay Secrecy Practice on Firm Voluntary Turnover Rate
Moderated By Distributive Justice Climate (Firm Level)
Distributive
justice climate
Hypothesis 3
Pay secrecy
practice
developed (Marasi, Wall, & Bennett, 2018; Smit &
Montag-Smit, 2018; Tremblay & Chênevert, 2008).
These existing scales typically include items tapping
into varying dimensions and aspects of pay secrecy.
Thus, we relied upon our conceptualization of pay
secrecy (based on Arnold et al., 2018) and the psy-
chometric validity evidence of these previously
established scales to help us select the most valid and
appropriate items for our purposes. For example,
content-wise, we selected items that reflected per-
ceptions of the organization’s practice rather than
beliefs held by employees about pay secrecy.
Employees were asked to indicate the extent to which
they agreed that their organization maintained a policy of
pay secrecy with reference to a 5-point Likert scale
(ranging from 1 5 strongly disagree to 5 5 strongly agree).
Drawing from existing scales (e.g., Marasi et al., 2018;
Tremblay & Chênevert, 2008), two items captured pro-
cedural transparency (e.g., “My organization does not
disclose the administrative procedures on how pay
levels and pay raises are determined for managerial,
professional, and technical staff”) and three items cap-
tured communication openness (e.g., “My organization
formally disciplines [by suspending or firing] employees
disclosing their pay to coworkers or colleagues”). All
items are displayed in the Appendix A. Cronbach’s a
was .81.
While, in theory, these two aspects are distinct from
each other (Arnold & Fulmer, 2019; Arnold et al., 2018),
in practice, they are less so. To elaborate, organizational
practices that restrict pay-related communication be-
tween employees (i.e., communication openness) and
that do not disclose the process and criteria for pay-
related outcomes (i.e., procedural transparency) are
likely to be consistent (e.g., if a company provides a lot of
information about how pay is allocated, the company is
probably also less sensitive about employees disclosing
their pay to each other). Conversely, in order to preserve
their labor market competitiveness (i.e., not reveal their
April
Firm voluntary
turnover rate
compensation strategy), organizations probably would
neither allow employees to communicate about their
pay with each other nor offer much procedural trans-
parency. These practices collectively allow organiza-
tions to preserve flexibility in determining pay for
individual employees while maximizing managerial
discretion over rewards allocation. Therefore, these two
aspects of pay transparency are likely to go hand in hand
in real-world practice and can be considered to alto-
gether reflect pay secrecy practice. In the Results section,
we run confirmatory factor analyses to methodologically
support the collapsing of procedural transparency and
communication openness into one overall pay secrecy
scale.3, 4
3
As our five-item pay secrecy scale has not been previously
used, we collected additional data to further test and support
the conceptual logic for the dimensionality of our pay secrecy
measure. Specifically, we collected data from 301 employed
adults using Amazon’s MTurk. For the one-factor pay secrecy
model, x2 (5, n 5 301) 5 4.97, p 5 .42, CFI 5 1.00, TLI 5 1.00,
RMSEA 5 .00, and SRMR 5 .02. Moreover, the indicators all
significantly loaded on this one latent factor. Comparing this
measurement model with an alternative model in which the
five items of pay secrecy perceptions were loaded onto two
factors (i.e., procedural transparency and communication
openness) showed that the two models did not differ signifi-
cantly from each other, Dx2 (Ddf 5 1) 5 .001, p . .05. Thus, the
one-factor model is more parsimonious.
4
Based on this same MTurk sample, we also collected data to
assess our pay secrecy scale’s construct validity. As expected,
pay secrecy was positively correlated with corporate hypocrisy
(r 5 .44, p , .001) and workplace uncertainty (r 5 .31, p , .001)
and negatively correlated with informational justice percep-
tions (r 5 2.35, p , .001). Overall, these results support the
convergent validity of our pay secrecy scale. Furthermore,
consistent with findings from Smit and Montag-Smit (2019),
pay secrecy was weakly correlated with pay information
seeking preferences (r 5 .13, p 5 .02). This weak correlation
supports the discriminant validity of the pay secrecy scale we
use in our research.
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
Organizational trust. We measured organiza-
tional trust using the seven-item scale developed by
Schoorman and Ballinger (2006). Employees rated
the extent to which they agreed with the statements
on a 5-point Likert scale (from 1 5 strongly disagree
to 5 5 strongly agree). A sample item was “My or-
ganization keeps my interest in mind when making
decisions.” Cronbach’s a was .78.
Distributive justice. We measured distributive
justice adapting four items created and validated by
Colquitt (2001). Employees rated the extent to which
they agreed with the statements on a 5-point Likert
scale (from 1 5 strongly disagree to 5 5 strongly
agree). Sample items included “My pay reflects the
effort that I have put into my work” and “My pay is
justified given my performance.” Cronbach’s a
was .95.
Turnover intentions. We measured employees’
turnover intentions with three items from
Cammann, Fichman, Jenkins, and Klesh (1983). A
sample item was “I often think about leaving the
organization.” Participants rated the extent of their
agreement on a 5-point Likert scale (from 1 5
strongly disagree to 5 5 strongly agree). Cronbach’s
a was .80.
Control variables. In our analyses, to rigorously
test the hypotheses (i.e., parcel out common
method-related variance [Podsakoff, MacKenzie,
Lee, & Podsakoff, 2003]), we controlled for
the baseline measures of organizational trust
and turnover intentions at Time 1. 5 We also
controlled for employee age, because older em-
ployees are more likely to have better person–
organization fit and greater investments in their
organization, making them more likely to be at-
tached to their current organization, as compared
to younger employees (Allen & Meyer, 1993; Cohen
& Golan, 2007; Martocchio, 1989), as well as em-
ployee gender, because, compared to men, women
are less likely to lose trust and more likely to regain
trust in a transgressor in response to a trust viola-
tion (Haselhuhn, Kennedy, Kray, Van Zant, &
Schweitzer, 2015). We also controlled for organi-
zational size and employees’ organizational
tenure. We controlled for organizational size
(operationalized in terms of employee headcount)
because organizations with a larger operating ca-
pability are likely to offer employees greater
5 7
Removing these Time 1 organizational trust and turnover
intentions control variables from our model did not impact our
findings (i.e., we maintained the same signs and significance
levels) as the current Study 1 results reported in the main text.
491
opportunities for career development (Benson,
Dickinson, & Neidt, 1987) and higher wages
(Kalleberg & Van Buren, 1996). Organizational
tenure is an important consideration in our study
because levels of trust between employees and
their organization may evolve as time passes
(Mayer et al., 1995). Moreover, research suggests
that employees’ tenure with their organizations is
related to their turnover decisions (Griffeth, Hom,
& Gaertner, 2000). Although we do not have theo-
retical reason to expect interaction effects between
pay secrecy and other justice types (i.e., UMT
provides reasoning only for procedural and dis-
tributive justice cue triangulation under uncer-
tainty), prior research has shown that other justice
dimensions may play a mediating role in pay
secrecy’s downstream consequences (Bamberger &
Belogolovsky, 2010) and predict trust and turnover
outcomes (Colquitt, Conlon, Wesson, Porter, & Ng,
2001). Therefore, to rule out these potential alter-
native explanations and more precisely test the
fairness uncertainty effects of pay secrecy (rather
than general fairness about pay procedures and
information), we also controlled for procedural
justice and informational justice using Colquitt’s
(2001) measures.
In addition, we controlled for employee monthly
salary (using “over 10,000 Yuan” as the reference cate-
gory, four dummy variables for “below 3,000,”
“3,001–5,000,” “5,001–8,000,” and “8,001–10,000
Yuan” were controlled) on all the endogenous variables
in our hypothesized model.6 Finally, we controlled for
industry (using “public administration” as the refer-
ence, 16 dummy variables for “manufacturing,” “con-
struction,” “health care,” “hospitality,” “information,”
“retail,” “education,” “entertainment,” “transportation,”
“waste management,” “finance or insurance,” “oil and
gas,” “real estate,” “management of companies,” “tech-
nical,” and “other services” were controlled). For the
sake of brevity, we do not present the correlations or
coefficients associated with the industry dummy-coded
variables in the tables, but they are available upon re-
quest from the corresponding author.7
6
We ran a supplemental analysis treating our ordinal
salary variable as continuous, and our finding pattern
remained virtually the same as those reported in the
manuscript for Study 1. Full results of the analysis are
available from the corresponding author upon request.
Removing all of these Study 1 control variables did not
change the results or our substantive conclusions for Study 1.
Full details of the results of these analyses without controls are
available from the corresponding author upon request.
492 Academy of Management Journal
Analytic Strategy
Multiple regression analyses were conducted to
test our hypotheses. To facilitate the interpretation of
coefficients, all predictors were grand-mean cen-
tered. The interaction term was formed by taking the
product of grand-mean centered pay secrecy per-
ceptions and distributive justice.
Results
Means, standard deviations, and intercorrela-
tions among the focal variables are reported
in Table 1. Pay secrecy perceptions were not
significantly correlated with either turnover in-
tentions (r 5 .09, p 5 .21) or distributive justice
perceptions (r 5 .00, p 5 .98), but were inversely
correlated with organizational trust (r 5 2.15,
p 5 .04). Moreover, organizational trust was
positively correlated with distributive justice
perceptions (r 5 .26, p , .001) and negatively
correlated with turnover intentions (r 5 2.36,
p , .001). These findings provide preliminary in-
sight into some of the hypothesized relationships.
Confirmatory factor analysis. Confirmatory fac-
tor analyses were conducted to examine whether
scores on pay secrecy perceptions captured one
and only one construct. Scores on the five items
of pay secrecy perceptions were first used as in-
dicators for one latent variable. Results showed
that this one-factor model fit the data well, x2 (5,
n 5 196) 5 6.74, p 5 .24, CFI 5 1.00, TLI 5 .99,
RMSEA 5 .04, and SRMR 5 .04. The indicators all
significantly loaded on the latent factor. We
compared this measurement model with an al-
ternative model in which the five items of pay
secrecy perception were loaded onto two factors
(i.e., procedural transparency and communica-
tion openness). The model comparison results
showed that the two models did not differ sig-
nificantly from each other, Dx2 (Ddf 5 1) 5 2.79,
p . .05. Therefore, it is reasonable to retain the
one-factor measurement model, which is the
more parsimonious model.
Hypotheses testing. Unstandardized coeffi-
cient estimates for the hypothesized model
are presented in Table 2. As shown in the table,
we found that distributive justice significantly
moderated the relationship between pay secrecy
perceptions and organizational trust (B 5 20.08,
p 5 .01). The interaction between pay secrecy per-
ceptions and distributive justice explained an addi-
tional 2% of the variance in organizational trust (ΔF 5
April
4.94, p , .001), beyond the variance explained by the
control variables and the main effects of pay secrecy
perceptions and distributive justice (R2 5 .45) on or-
ganizational trust.
We next used the Johnson–Neyman (J–N) tech-
nique, which identifies regions of moderator
values at which predictor–outcome relations are
significantly different from zero (Gardner, Harris,
Li, Kirkman, & Mathieu, 2017; Preacher, Curran,
& Bauer, 2006), to test our moderation effect.
Based on the J–N technique, we found that the
relationship between pay secrecy perceptions
and organizational trust was significant and
positive when distributive justice (grand-mean
centered) was lower than 21.61, and this rela-
tionship was significant and negative when dis-
tributive justice (grand-mean centered) was
higher than 0.14. Thus, pay secrecy was nega-
tively related to trust when distributive justice
was high, but positively related to trust when
distributive justice was low, fully supporting
Hypothesis 1 (see Figure 3a for the J–N technique-
derived confidence bands, and Figure 3b for the
general pattern of the interaction). Moreover, we
tested the indirect effect of pay secrecy on turn-
over intentions as moderated by distributive
justice with the Monte Carlo method (using
20,000 bootstrap replications). We found that this
moderated mediation effect was significant (in-
dex of moderated mediation 5 0.02, with a 95% CI
of [.001, .056]). 8 , 9 Using the J–N technique, we
also further examined the regions of significance
for the conditional indirect effects of pay secrecy
on turnover intentions (via organizational trust)
across the full observed centered range of the
distributive justice moderator [22.17, 1.83]. We
found that this indirect effect was negative and
significant when centered distributive justice
was lower than 20.91, but was positive and sig-
nificant when centered distributive justice was
higher than 0.54. Thus, at high (low) levels of
8
To assess the robustness of our moderated mediation
index findings based on 20,000 bootstrap replications, we
also ran our Monte Carlo procedure using 10,000, 2,000, and
1,000 bootstrap replications. Our results were virtually the
same as the results with 20,000 bootstrap replications. Full
results are available from the corresponding author upon
request.
9
We also tested our moderated mediation effect using
the bias-corrected (nonparametric) bootstrap method and
found the same results pattern. Full results are available
from the corresponding author upon request.
 2021

TABLE 1
Study 1: Means, Standard Deviations, Reliabilities, and Correlations among Variables
Variables M SD 1 2 3 4 5 6 7 8 9 10

Employee monthly salary (CNY) (T1):

1. ,3,000 0.02 0.12 —
2. 3,001–5,000 0.09 0.28 2.04 —
3. 5,001–8,000 0.16 0.37 2.06 2.14 —
4. 8,001–10,000 0.14 0.35 2.05 2.12 2.18* —
5. Employee age (T1) 32.14 6.21 2.10 2.11 .01 .00 —
6. Employee gender (T1) 0.64 0.48 .01 .19** .10 2.10 .00 —
7. Organizational size (T1) 8.14 2.95 2.01 2.21** 2.18* .02 2.16* 2.10 —
8. Organizational tenure (T1) 4.53 4.79 2.04 .08 .16* 2.03 .59** .07 2.06 —
9. Informational justice (T1) 3.09 0.99 2.05 .16* 2.08 2.18* 2.13 .07 2.03 2.20** (.91)
10. Procedural justice (T1) 3.01 0.81 2.07 2.03 2.01 2.18* 2.09 2.03 .03 2.14 .66** (.86)
11. Pay secrecy perceptions (T1) 3.50 0.99 2.20** 2.16* 2.09 2.03 2.09 2.02 .11 2.10 2.22** 2.15*
12. Organizational trust (T1) 3.18 0.62 2.01 .01 .01 .02 .05 2.04 2.08 .00 .39** .40**
13. Organizational trust (T2) 3.10 0.64 .00 2.07 2.02 2.03 .04 2.08 .08 2.13 .35** .39**
14. Distributive justice (T1) 3.17 1.03 2.20** 2.08 2.13 2.01 2.11 .00 .05 2.13 .39** .46**
15. Turnover intentions (T1) 2.78 1.01 .12 .03 .07 .01 2.07 .02 2.04 .00 2.43** 2.50**
16. Turnover intentions (T2) 2.79 0.97 .07 .04 .02 .10 2.08 .03 2.05 2.01 2.31** 2.35**

Variables 11 12 13 14 15 16

Employee monthly salary (CNY) (T1):

1. ,3,000
2. 3,001–5,000
3. 5,001–8,000
4. 8,001–10,000
5. Employee age (T1)
6. Employee gender (T1)
7. Organizational size (T1)
8. Organizational tenure (T1)
Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi

9. Informational justice (T1)

10. Procedural justice (T1)
11. Pay secrecy perceptions (T1) (.81)
12. Organizational trust (T1) 2.16* (.74)
13. Organizational trust (T2) 2.15* .62** (.78)
14. Distributive justice (T1) .00 .31** .26** (.95)
15. Turnover intentions (T1) .13 2.38** 2.36** 2.37** (.79)
16. Turnover intentions (T2) .09 2.26** 2.36** 2.19** .72** (.80)

Notes: n 5 196. Cronbach’s a coefficients are in parentheses along the diagonal. Dummy-coded variables for industry are not reported for brevity.
*p , .05
**p , .01
493
 494

TABLE 2
Study 1: Unstandardized Coefficients of the Hypothesized Model
Organizational trust (T2) Turnover intentions (T2)

Step 1 Step 2 Step 3 Step 1 Step 2 Step 3

Variables Est. SE Est. SE Est. SE Est. SE Est. SE Est. SE

Intercept 1.29** 0.19 1.30** 0.20 1.27** 0.20 .88** 0.16 1.59** 0.32 1.58** 0.33
Control Variables
Monthly salary (CNY) (T1)
,3,000 2.18 0.32 2.19 0.33 .05 0.33 .06 0.44 .09 0.44 .06 0.46
3,001–5,000 2.05 0.14 2.05 0.14 2.03 0.14 .10 0.19 .12 0.19 .11 0.19
5,001–8,000 .01 0.11 .01 0.11 .05 0.11 2.09 0.15 2.06 0.15 2.06 0.15
8,001–10,000 2.06 0.11 2.07 0.11 2.04 0.10 .30* 0.15 .30* 0.14 .29* 0.14
Employee age (T1) .02* 0.01 .02* 0.01 .02* 0.01 2.01 0.01 .00 0.01 .00 0.01
Employee gender (T1) 2.03 0.07 2.03 0.07 2.03 0.07 2.02 0.10 2.04 0.10 2.04 0.10
Organizational size (T1) .03* 0.01 .03* 0.01 .03* 0.01 .00 0.02 .00 0.02 .00 0.02
Organizational tenure (T1) 2.03** 0.01 2.03** 0.01 2.03** 0.01 .00 0.01 2.01 0.01 2.01 0.01
Organizational trust (T1) .57** 0.06 .57** 0.06 .58** 0.06
Turnover intentions (T1) .68** 0.06 .68** 0.06 .68** 0.06
Informational justice (T1) .05 0.05 .04 0.05 .04 0.05 2.01 0.07 .00 0.07 .00 0.07
Procedural justice (T1) .07 0.06 .06 0.06 .06 0.06 .04 0.09 .05 0.09 .05 0.09
Focal Variables
Academy of Management Journal

Pay secrecy perceptions (T1) 2.02 0.04 2.02 0.04 2.03 0.05 2.03 0.05
Organizational trust (T2) 2.23** 0.08 2.22** 0.08
Distributive justice (DJ) (T1) .02 0.04 .03 0.04 .08 0.05 .08 0.05
Pay secrecy perceptions (T1) 3 DJ (T1) 2.08** 0.03 .01 0.04
R2 0.45 0.45 0.47 0.57 0.59 0.59
DR2 0.00 0.02 0.02 0.00
F 5.05** 4.70** 34.94* 8.18** 7.88** 7.61**
DF 0.45 6.85** 2.76 0.40

Notes: Effects of dummy-coded variables for industry are not reported for brevity. Reference group for monthly salary dummy-coded variables 5 over 10,000 Yuan. DR2 for Step 2
uses Step 1 as reference; DR2 for Step 3 uses Step 2 as reference.
*p , .05
**p , .01
April
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi 495

FIGURE 3A distributive justice, pay secrecy perceptions were

Study 1: Regions of Significance for the Moderating positively (negatively) related to turnover inten-
Effect of Distributive Justice on the Relationship tions via lower (higher) levels of organizational
between Pay Secrecy Perceptions and trust, fully supporting Hypothesis 2. 10
Organizational Trust Supplemental analysis. In order to rule out the
possibility of a dual-stage (i.e., first-stage and
A second-stage) moderated mediation effect, we ran
a supplementary analysis in which distributive
0.3

justice was specified to moderate the relationship

between pay secrecy perceptions and organiza-
tional trust, as well as the relationship between
0.2

organizational trust and turnover intentions.

The findings for this model indicated that, while
distributive justice moderated the relationship
0.1

between pay secrecy perceptions and organiza-

Simple Slope

tional trust (B 5 20.08, p 5 .01), distributive

justice did not significantly moderate the rela-
0.0

tionship between organizational trust and turn-

over intentions (B 5 20.03, p 5 .65). Thus, our
proposed UMT-based model was adequately
–0.1

specified.

Discussion
–0.2

The results of Study 1 indicate that, consistent

with our hypothesizing, the association of pay
secrecy perceptions and turnover intentions
–0.3

operates via employee attributions of organiza-

–2 –1 0 1 tional trust, with the first stage of this mediation
Distributive Justice moderated by distributive justice perceptions. In
particular, consistent with UMT’s emphasis on
the certainty effect, perceptions of low pay se-
crecy (i.e., greater transparency) versus high
secrecy were associated with higher levels of or-
FIGURE 3B ganizational trust when employees perceived
Study 1: Moderating Effect of Distributive Justice on high distributive justice. Consistent with UMT’s
the Relationship between Pay Secrecy Perceptions
10
and Organizational Trust To better assess whether other forms of justice
(i.e., procedural and informational) might have rele-
B 3.4 vance in the triangulation of justice cues we theorize
and test, we ran supplemental analyses testing pay
3.3 secrecy’s interactions with procedural and informa-
Organizational trust

3.2 tional justice in predicting trust. Supporting our em-

phasis on pay secrecy and distributive justice
3.1 triangulation, neither the interaction between pay
3
secrecy perceptions and procedural justice nor the in-
teraction between pay secrecy perceptions and infor-
2.9 mational justice predicted organizational trust.
Together, these results suggest that distributive justice
2.8
Low High reflects the most relevant source of fairness information
Pay secrecy perceptions that affects how pay secrecy perceptions translate to
employee inferences of organizational trustworthiness.
Low DJ (–1 SD) High DJ (+1 SD) Full results of these analyses are available from the
Note: DJ 5 distributive justice. corresponding author upon request.
496 Academy of Management Journal
status quo preservation heuristic, when distrib-
utive justice perceptions were low, pay secrecy
was actually positively related to organizational
trust. Overall, this finding suggests that, rather
than being compounding, as justice theories
would suggest, employee trust reactions under
the combination of lower justice cues takes an
antagonistic form. These findings offer important
insights into the relationship between pay se-
crecy and employee turnover, suggesting that the
association may be contingent upon distributive
justice, and operate via employees’ trust in their
organization consistent with UMT uncertainty-
related fairness heuristics.
STUDY 2
Sample and Procedure
Upon establishing support for our individual-
level model in Study 1, we next sought to extend
this model to the firm level. To do so, we used an
archival data set collected at the firm level for a
separate project in 2013 (no publications or
working manuscripts are based on this archival
data set). Because this archival data set contained
all of our focal variables at the firm level, we relied
upon this data set to test our firm-level hypothe-
ses. Data were solicited from 200 firms (state owned,
private, and multinational) included on the list of reg-
istered firms of Dongguan City’s (Guangdong Province,
China) Industrial and Commercial Bureau. To make
sure that we sufficiently sampled small, medium, and
large firms, we randomly sampled 67 small firms
(i.e., 100 or fewer employees), 67 medium-sized
firms (i.e., 101–500 employees), and 66 large
firms (i.e., more than 500 employees) from the reg-
istered firm list. We contacted each firm via tele-
phone and asked to speak with an HR or general
management representative. Out of the 200 firms,
107 (35 small, 33 medium sized, and 39 large) agreed
to participate in the study.
The CEO or HR manager in each participating firm
was asked to complete a firm-level survey, and em-
ployees (nonmanagerial) were asked to complete an
employee survey. For the employee survey, a maxi-
mum of 40 employees in each firm was sampled
randomly with an equal probability of selection.
Similar sampling methods have been used in previ-
ous studies (e.g., Fulmer, Gerhart, & Scott, 2003).
Random sampling provides greater confidence
of obtaining representative firm-level aggregated
scores for each organization. The response rates at
April
the employee level ranged from 5% to 100% across
all firms, with the median response rate being 60%.11
After matching the firm-level data and the employee-
level data and excluding observations with missing
values on the focal variables, 86 firms and 2,035
employees from these firms remained in our sample.
Among the employees, 48% were male, the average
age was 30.21 years old (SD 5 7.48), and average
organizational tenure was 4.79 (SD 5 4.82) years. All
surveys were conducted in Chinese and were ad-
ministrated as paper surveys. A translation-back
translation procedure (Brislin, 1970) was followed to
ensure the accuracy of the translation of the English-
based measures into Chinese.
Measures
Pay secrecy practice. In the manager survey, pay
secrecy practice was measured using the same five
items that we used in assessing pay secrecy percep-
tions in Study 1. In particular, CEOs or HR managers
in each company were asked to indicate the extent to
which they agreed with each of the pay secrecy
items, recording their response on the basis of a 5-
point Likert scale (ranging from 1 5 completely dis-
agree to 5 5 completely agree). We asked CEOs or HR
managers to complete this measure as they are more
likely to be familiar with and rate on the actual
practice compared to lower-level employees, who
may have varied perceptions of the extent to which
the firm uses pay secrecy practice. Cronbach’s a for
the scale was .75.
Distributive justice climate. We measured dis-
tributive justice climate on the basis of employee
perceptions using the same four-item scale by
Colquitt (2001) that we used in Study 1. Employees
rated the extent to which they agreed with the
statements on a 7-point Likert scale (from 1 5
strongly disagree to 7 5 strongly agree). Cronbach’s a
was .94. Scores of distributive justice climate were
aggregated from individual employee ratings to the
firm level following the direct consensus composi-
tion model. In support of aggregation, the median
rwg(j) across the firms for distributive justice climate
11
We found no significant differences in distributive
justice climate levels among firms with lower versus
higher response rates. Moreover, we did not find signifi-
cant differences in mean response rates among firms of
different sizes. However, we did find a significant differ-
ence in mean response rates for firms in the health care and
hospitality industries versus firms identifying as in the
“other” industry category.
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
was .82, indicating high levels of within-firm
agreement. Additional support for aggregating
distributive justice climate was provided by the inter-
rater reliability indices, ICC(1) 5 .11 and ICC(2) 5 .75.
In addition, one-way analysis of variance results
showed that there were significant differences in firm-
level means of distributive justice climate ratings, F(85,
1949) 5 4.03, p , .001. Taken together, these results
indicate that there was substantial variance in the
variable at the between-firm level, thus warranting its
aggregation to this level as an indicator of distributive
justice climate.
Firm voluntary turnover rate. The current rate of
employee voluntary turnover for each company was
assessed by having the CEO or HR manager record
their firm’s annual voluntary turnover rate in the
previous year (as a proportion of their workforce).
Park and Shaw’s (2013) meta-analysis revealed
minimal differences between turnover rates reported
by such key informants and turnover rates from ar-
chival sources. The annual voluntary turnover rates
ranged from 0.00 to 0.94 in our sample.
Control variables. We controlled for organiza-
tional age in our analyses because older establish-
ments may have more established practices (Batt &
Colvin, 2011; Li, Wang, van Jaarsveld, Lee, & Ma, 2018)
and previous research has shown that a firm’s age has
an association with their quit rates (e.g., Shaw et al.,
1998). We also controlled for organizational size
(operationalized in terms of headcount) and industry
as we did in Study 1. We controlled for organizational
size because organizations with a larger operating
capacity are likely to offer employees greater oppor-
tunities for career development (Benson et al., 1987)
and offer higher wages (Kalleberg & Van Buren, 1996).
We controlled for industry via 13 dummy variables,
representing the comparison between the “services
industry” (referent) to 13 other industries such as
“manufacturing” and “finance or insurance” in our
analyses, as they have been deemed important orga-
nizational characteristics that can impact firm turn-
over rate and may also be linked to firms’ pay practices
(e.g., Benson et al., 1987; Hausknecht & Trevor, 2011;
Shaw et al., 1998). For the sake of brevity, we do not
present the parameters for the dummy-coded vari-
ables in the tables, but they are available upon request
from the corresponding author.12
12
Removing all of these Study 2 control variables did not
change the results or our substantive conclusions for Study
2. Full details of the results of these analyses without
controls are available from the corresponding author upon
request.
497
Analytic Strategy
Based on the aggregation statistics presented above,
and in order to test our firm-level hypothesis (Hy-
pothesis 3), we aggregated distributive justice cli-
mate from the employee level to the firm level. All
remaining variables used in the analyses were already
at the firm level, including pay secrecy practice and
firm voluntary turnover rate. Tobit regression was
conducted because voluntary turnover rate is a cen-
sored variable. To facilitate the interpretation of co-
efficients, all predictors were grand-mean centered.
The interaction term was formed by taking the prod-
uct of grand-mean centered pay secrecy practice and
distributive justice climate.
Results
Means, standard deviations, and intercorrelations
among the focal variables are reported in Table 3. As
can be seen in the table, pay secrecy practice was not
significantly correlated with firm voluntary turnover
rate (r 5 .14, p 5 .24) or distributive justice climate
(r 5 .14, p 5 .20).
Confirmatory factor analysis. Confirmatory fac-
tor analyses were conducted to examine whether scores
on pay secrecy practice captured one construct. Con-
sistent with Study 1, scores on the five items of pay se-
crecy practice were used as indicators of one latent
variable. Results showed that the one-factor model fit the
data well, x2 (5, n 5 86) 5 2.42, p 5 .79, CFI 5 1.00, TLI 5
1.04, RMSEA 5 .00, and SRMR 5 .04. Indicators all
significantly loaded on this latent factor. We compared
this measurement model with an alternative model in
which the five items of pay secrecy practice were loaded
onto two factors (i.e., procedural transparency and
communication openness). The model comparison re-
sults showed that the two models did not differ signifi-
cantly from each other, Dx2 (Ddf 5 1) 5 1.15, p . .05.
Accordingly, we retained the one-factor measurement
model, which is the more parsimonious model.
Hypotheses testing. Unstandardized coefficient
estimates for the hypothesized model are presented in
Table 4. We found that distributive justice climate
moderated the relationship between pay secrecy prac-
tice and firm voluntary turnover rate (B 5 0.16, p 5 .03).
Of note, the interaction between pay secrecy practice
and distributive justice climate explained an additional
5% of the variance in firm voluntary turnover rate be-
yond the variance explained by the control variables and
the main effects of pay secrecy practice and distributive
justice climate on firm voluntary turnover rate (R2 5 .35).
We again used the J–N technique to identify regions
of moderator values at which predictor–outcome
498 Academy of Management Journal
TABLE 3
Study 2: Means, Standard Deviations, Reliabilities, and Correlations among Variables
Variables M SD
1 Organizational size 2.31 1.35
2 Organizational age 37.29 3.73
3 Pay secrecy practice 3.07 0.97
4 Distributive justice climate 4.67 0.52
5 Firm voluntary turnover rate 0.18 0.29
Notes: n 5 86. Cronbach’s a coefficients are in parentheses along the diagonal. Dummy-coded variables for industry are not included for
brevity.
*p , .05
relations are significantly different from zero (across
the full range of the grand-mean centered distribu-
tive justice climate moderator values observed
[21.17, 1.42]; Preacher et al., 2006). Based on the J–N
technique-derived confidence bands in Figure 4a
(with simple slope on the y-axis and the moderator
values on the x-axis), we found that the relationship
between pay secrecy practice and firm voluntary
turnover rate was significant and positive when
distributive justice climate (grand-mean centered)
was higher than 0.18. However, the pay secrecy
practice–voluntary turnover rate relation was not
significant for any distributive justice climate values
smaller than 0.18. See also Figure 4b for the general
pattern of the interaction. Together, these results
partially support Hypothesis 3.13
Discussion
Seeking to replicate and extend our Study 1
individual-level findings to the firm level in Study 2,
the results of Study 2 indeed indicate that the dis-
tributive justice-moderated relationship between
pay secrecy and voluntary turnover takes a some-
what similar form at the firm level. More specifically,
we found a positive firm-level association between
pay secrecy practice and voluntary turnover rates for
employees in firms characterized by high distribu-
tive justice climates, whereas, for employees in firms
characterized by low distributive justice climates,
the relationship was not significant. These findings
13
We ran a supplemental analysis, testing Hypothesis 3
using the number of employees who voluntarily left the
firms in the prior year as the dependent variable (rather
than the ratio or turnover rate). We found the same results
pattern with distributive justice climate moderating the
firm-level pay secrecy practice-number of employees vol-
untarily turning over relationship. Details of this analysis
are available from the corresponding author upon request.
April
1 2 3 4 5
—
2.17 —
.26* .15 (.75)
.00 2.12 .14 (.94)
.10 2.16 .14 2.09 —
indicate that, at the firm level, justice cue triangula-
tion involving pay secrecy is at least partly consistent
with the certainty effect and status quo preservation
heuristics elaborated in UMT and as observed in
Study 1. As Study 2’s findings were not fully sup-
portive of our antagonistic distributive and proce-
dural justice interaction pattern prediction, it is
possible that, although status quo preservation heu-
ristics activated by secretive pay practices may lead
employees to discount lower distributive justice
climate, pay secrecy itself may still serve as a nega-
tive signal of potentially opportunistic intent on the
part of the organization, thus diminishing some of
the protective effect of pay secrecy-based uncer-
tainty on voluntary turnover and leading to our null
effect under the low distributive justice climate
condition. Nevertheless, taking both studies’ results
together, we were able to provide robust evidence
across two levels that (a) employee fairness-related
turnover reactions under dual lower justice cues
(i.e., high pay secrecy and low distributive justice)
are less severe than justice theories would predict
(i.e., more antagonistic) and (b) the certainty effect
seems to operate robustly under high distributive
justice conditions regardless of whether it is exam-
ined at the individual level or the firm level.
GENERAL DISCUSSION
In two studies—one conducted at the individual
level and the other at the firm level—we demon-
strated that the association between pay secrecy and
turnover-related outcomes is more nuanced than
conventionally conceived. More specifically, con-
sistent with the principles of UMT (van den Bos &
Lind, 2002), our findings indicate that, rather than
being universal, this relationship is contingent upon
perceptions of distributive justice, with turnover
intentions (at the individual level) and voluntary
turnover rates (at the firm level) sensitive to the
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi 499

TABLE 4
Study 2: Unstandardized Coefficients of the Hypothesized Model
Firm voluntary turnover rate

Step 1 Step 2 Step 3

Variables Est. SE Est. SE Est. SE

Intercept .17* 0.07 .17* 0.07 .19* 0.07

Control Variables
Organizational size .01 0.04 .00 0.03 .00 0.01
Organizational age 2.01 0.01 .00 0.01 .00 0.01
Focal Variables
Pay secrecy practice .03 0.03 .04 0.03
Distributive justice climate (DJC) .02 0.06 .03 0.06
Pay secrecy practice 3 DJC .16* 0.07
R2 0.35 0.35 0.40
DR2 0.00 0.05

Notes: Effects of dummy-coded variables for industry are not reported for brevity. F-statistics are not available for Tobit regression model. DR2
for Step 2 uses Step 1 as reference; DR2 for Step 3 uses Step 2 as reference.
*p , .05

degree of pay secrecy under conditions of high dis-
tributive justice. However, it was at the individual
level only that low distributive justice significantly
conditioned the pay secrecy–turnover intentions
link.
Moreover, the results of Study 1 indicate that this
distributive justice-moderated association between
pay secrecy and turnover-related outcomes is
explained by employees’ organizational trust, a
fairness judgment capturing the degree to which
employees feel that they may be subject to employer
opportunism. Consistent with the triangulation no-
tion common to both UMT (van den Bos & Lind,
2002) and justice theories (Brockner & Wiesenfeld,
1996), distributive justice perceptions moderated
the association between perceptions of pay secrecy, a
procedural justice cue that is conflated with uncer-
tainty, and subsequently assessed trust in the orga-
nization as an implicit fairness judgment, with the
latter, as suggested by UMT, linking to turnover in-
tentions. However, rather than manifesting the
compounding effect interaction suggested by justice
theories, our findings indicated a more antagonistic
interaction, predictable via UMT’s notions of status
quo preservation and certainty effect heuristics that
are triggered when an uncertain justice cue (i.e., pay
secrecy) is triangulated with an additional, more
certain justice cue (i.e., distributive justice). That is,
under conditions of high (low) distributive justice,
pay secrecy perceptions were inversely (positively)
associated with organizational trust, with the indi-
rect effect of pay secrecy (via organizational trust) on
turnover intentions significant under both distribu-
tive justice conditions.
Importantly, we found no evidence of an effect of
pay secrecy practice on voluntary turnover rate un-
der low distributive justice climate at the firm level.
At the firm level, this may stem from the fact that,
while the uncertainty associated with pay secrecy
practices may deter employees from making strong
negative inferences about organizational exploita-
tion in the context of low distributive justice climate,
the secrecy itself may still serve as an important
signal of potentially opportunistic employer intent
(Belogolovsky & Bamberger, 2014), resulting in rel-
atively similar trust perceptions as compared to
more pay transparent conditions. Accordingly, pay
secrecy may act as a double-edged sword in the
context of low distributive justice climate, with in-
formation asymmetry generating sufficient suspi-
cion to overcome the status quo preservation-related
discounting or dismissing effects of uncertainty
stemming from the secrecy, thereby resulting in an
association with voluntary turnover rate not appre-
ciably different from that of less pay secrecy in this
same condition (when employees are more certain
they are not being treated fairly regarding pay).
Further, it is important to note that, although a 2%
to 4% change in R2 appears small, the results of our
two studies are in line with prior effect sizes ob-
served in research on HR practices and perceptions
on turnover (e.g., Griffeth et al., 2000; Heavey,
Holwerda, & Hausknecht, 2013; Nyberg, 2010;
Shaw, Dineen, Fang, & Vellella, 2009). Indeed, based
500 Academy of Management Journal April

FIGURE 4A upon our Study 2 findings, our data show that, above
Study 2: Regions of Significance for the Moderating and beyond our control variables, holding all else
Effect of Distributive Justice Climate on the equal, a 1 SD decrease in pay secrecy practice from
Relationship between Pay Secrecy Practice and the mean and 1 or 2 SD increase in distributive jus-
Firm Voluntary Turnover Rate tice climate from the mean equate to about a 12%
voluntary turnover rate. Given that our model indi-
A cates that firm voluntary turnover rates are roughly
0.4

19% at average pay secrecy practice and distributive

justice climate levels, these results show that these
shifts in our focal variables can decrease firm vol-
0.3

untary turnover rates by 7 percentage points.

0.2

Implications for Theory and Practice

Our findings offer several implications to justice
Simple Slope

theories, as well as to compensation theory and

0.1

practice. From a theoretical perspective, our UMT-

based theorizing and findings suggest an important
extension to justice theories, indicating that, when
0.0

unfairness is conflated with uncertainty (as is the

case with pay secrecy, an uncertain indicator of
pay-related procedural justice), the predicted com-
–0.1

pounding effects of procedural and distributive jus-

tice may fail to apply, with our results supporting a
more antagonistic interaction effect. In this regard,
–0.2

our findings extend Brockner’s (2002) notion that

procedural unfairness may attenuate the negative
impact of distributive injustice on self-evaluations
–1.0 –0.5 0.0 0.5 1.0 1.5 (e.g., self-esteem) to organizational attitudes (such as
Distributive Justice Climate organizational trustworthiness) and behaviors (such
as withdrawal). No less important, they also offer
important insights into the mechanism underlying
this counterintuitive effect, suggesting that fairness
judgments, such as organizational trust, can explain
the combined impact of pay secrecy and outcomes
on turnover. Specifically, based on UMT, we posited
FIGURE 4B and found organizational trust to serve as a key global
Study 2: Moderating Effect of Distributive Justice fairness judgment mediating the distributive justice-
Climate on the Relationship between Pay Secrecy moderated, indirect effect of pay secrecy on turnover
Practice and Firm Voluntary Turnover Rate intentions. Accordingly, our model and findings of-
fer important mid-range extensions to justice theo-
B 0.3 ries that may extend beyond pay secrecy practices,
Firm turnover rate

applying to other administrative procedures and

0.2 processes (e.g., performance appraisal, career de-
velopment, and promotion procedures) also typi-
0.1 cally executed under a veil of secrecy.
Our UMT-based model and findings also offer
several important contributions to the compensation
0.0
Low High
literature. First, they suggest that UMT offers a fairly
Pay secrecy practice comprehensive explanation of both when and how
pay secrecy relates to turnover-related attitudes and
Low DJC (–1 or 2 SD) High DJC (+1 or 2 SD) behaviors. This explanation not only complements
Note: DJC 5 distributive justice climate. and extends more traditionally relied-upon justice
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
theories by explaining how the expected joint effects
of procedural and distributive justice may diverge
when procedural justice is also uncertain, but also
does so in a manner that is consistent with other
theories that are only able to explain particular ele-
ments of the overall effect (e.g., signaling theory or
prospect theory). Second, our findings demonstrate
that organizational trust serves as a key mechanism
linking pay secrecy to turnover intentions. UMT
suggests that, under uncertainty, individuals are
naturally inclined to seek fairness judgment-related
information from multiple sources as a central
means of uncertainty reduction, with such judg-
ments serving as the basis for action (van den Bos &
Lind, 2002). The understanding that fairness infor-
mation derived from a combination of pay secrecy
perceptions and distributive justice can meaning-
fully predict turnover intentions via organizational
trust is important for two reasons. First, to the extent
that trust serves as a key linking mechanism, there is
merit in investigating how pay secrecy may be inte-
grated with other organizational practices in order to
maximize or at least further enhance employee trust
in their organization. Second, if pay secrecy affects
turnover-related outcomes by activating higher
or lower levels of trust in the organization, it may
affect other employee attitudes and behaviors
(e.g., counterproductive work behaviors) through
this same mechanism. Accordingly, this insight of-
fers an important clue about the way in which pay
communication practices, such as secrecy, may in-
fluence a wide variety of other important work- and
employment-related outcomes.
Third, consistent with van den Bos and Lind’s
(2002: 23) proposition that the formation of fairness
judgments is “complicated,” our findings contribute
to the literature on pay secrecy by proposing and
demonstrating that, rather than basing actions
and intentions directly upon the secrecy of pay,
employee global fairness judgments (i.e., trust) and
related behaviors are governed by the joint consid-
eration of pay secrecy with an employee’s own (or
their group’s) perceptions of the fairness with which
pay-related outcomes are distributed. This is partic-
ularly important in that it provides an important
explanation for earlier mixed findings. As noted
earlier, the findings of Card et al. (2012) suggested
a positive association between pay transparency
and employee turnover (i.e., turnover intentions
rose after pay transparency was introduced), while
the findings of Belogolovsky and Bamberger
(2014) indicated greater retention intentions
under conditions of pay transparency (i.e., an
501
inverse transparency-turnover relationship). How-
ever, a closer look at the findings in both studies re-
veals that, in the case of the former, the positive pay
transparency-turnover association was significant
only for those on the low end of the pay distribution,
whereas, in the case of the latter, the inverse pay
transparency-turnover association was significant
only for the high performers (i.e., those earning more
due to the tight link between pay and performance in
that study). That is, in both studies, for those at the
upper end of the pay distribution, transparency was
linked to lower turnover-related outcomes, while, for
those at the lower end, transparency was either not
linked (Belogolovsky & Bamberger, 2014) or posi-
tively linked (Card et al., 2012) to these outcomes. In
that sense, the current study resolves and clarifies
what might otherwise appear to be equivocal findings,
suggesting that turnover-related outcomes may in-
deed benefit from greater pay transparency (i.e., less
secrecy) among those perceiving high distributive
justice or exposed to a positive distributive justice
climate. However, among those perceiving low dis-
tributive justice or exposed to a more negative dis-
tributive justice climate, greater pay transparency is
unlikely to yield any beneficial shift in individual
turnover intentions or, at the firm level, voluntary
turnover rates.
Our study offers two important empirical contri-
butions as well. First, whereas much of the recent
management research on pay secrecy has been
dominated by lab-based, experimental research
(e.g., Bamberger & Belogolovsky, 2017; Belogolovsky
& Bamberger, 2014), the current study is one of the
first to use field data in order to explore how and
when pay secrecy practices may link with employee
attitudes and behaviors. Second, with nearly all of
the empirical research on pay secrecy focusing on
individuals, to the best of our understanding, Study 2
represents one of the first attempts to examine pay
secrecy and its possible implications at the firm
level. The fact that our findings not only largely
replicate in two separate studies, but do so at two
different levels of analysis, suggests that there may be
substantial merit to the linkages we propose and test,
providing some evidence of multilevel homology.
Specifically, the UMT logic and mechanisms pro-
posed and tested at the individual level in Study 1
provided a foundation upon which we could argue
for how justice dynamics may account for the firm-
level effects of pay secrecy practices on voluntary
turnover in Study 2. In addition, our empirical
findings from Study 2 offered support to UMT’s
prediction of a firm-level effect of pay secrecy
502 Academy of Management Journal
practice on voluntary turnover rates as moderated by
distributive justice climate. Thus, especially given
that firm-level effects of pay secrecy practices have
rarely been examined, our Study 2 offers an impor-
tant step in bringing and extending pay communi-
cation theory to the level where this HR practice
originates.
Finally, from a practical perspective, our findings
offer important insights for organizations consider-
ing the adoption of more transparent versus secretive
pay practices as a means by which to reduce em-
ployee voluntary turnover. First, they suggest that, in
the absence of a more positive distributive justice
climate, lower levels of secrecy (i.e., greater trans-
parency) may have limited beneficial implications
for employee voluntary turnover. Indeed, when
adopted in an organizational context in which em-
ployees perceive low distributive justice, more se-
cretive practices may yield greater benefit in terms of
decreasing employee turnover intentions. However,
in the context of more positive distributive justice
perceptions or climate, higher levels of pay secrecy
are likely to be associated with lower levels of trust in
the organization and higher turnover intentions and
rates. To the extent that this may be counter to the
way in which many firms approach pay communi-
cation, our findings suggest the need to potentially
reconsider policies of pay secrecy when organiza-
tions are generally viewed by their employees as
paying fairly. Practically, one option for organiza-
tions that may benefit from greater transparency in-
cludes communicating to employees how their
salaries are calculated (Salary.com, 2020).
Second, our findings provide evidence that indi-
viduals seek to minimize pay-related procedural
uncertainty by integrating multiple justice cues.
Therefore, employers choosing to implement pay
secrecy practices may want to proactively provide
their employees with complementary information to
help them minimize their pay-related uncertainty.
For instance, employers could provide employees
with information regarding pay ranges at the aggre-
gate level, or yearly bonus or raise structures. Al-
though this additional information may not satisfy
some employees’ desire for full transparency, it may
allow employers to be more in control of information
employees use to develop their fairness perceptions
than if the employees scan their environment for
additional contextual justice information themselves.
Finally, our findings suggest that perceptions of pay
secrecy practices, in conjunction with distributive jus-
tice, impact employees’ attitudes (i.e., organizational
trust). As such, it may be important for employers to
April
monitor employees’ perceptions of the firm’s pay se-
crecy practices.
Limitations and Directions for Future Research
As suggested above, there is no shortage of open
questions when it comes to pay secrecy and its im-
plications for employees and those employing them.
However, beyond the questions already noted, lim-
itations in the current study may offer additional
opportunities for future research. One limitation has
to do with our focus on the more procedural aspects
of pay communication (i.e., procedural transparency
or secrecy) and communication openness, and our
decision (due to lack of variance) to exclude pay level
transparency from our analysis. Because pay level
transparency as a practice may signal trust and fair-
ness no less than procedural transparency and
communication openness, it may be expected to
operate in a manner similar to the aspects of pay se-
crecy examined in the current study. However, pay
level transparency may also involve the sharing of
actual pay data, and, as such, may facilitate infer-
ences regarding both procedural and distributive
fairness. Accordingly, it is possible that this form of
pay transparency drives fairness judgments more
directly, without being contingent upon one’s own or
the group’s distributive justice perceptions. Future
research is needed to assess this idea.
Second, we relied on self-report measures in Study
1 and, thus, common method variance could exist in
our data set (Podsakoff et al., 2003). Nevertheless,
given the nature of our theoretical mechanisms, self-
report measures were necessary in order to capture
participants’ attitudes and intentions. Moreover, the
threat of common method variance was alleviated by
the data collection design in Study 1, which sepa-
rated the two questionnaires at different times
(independent variable and the moderator were
measured first, and the mediator and dependent
variables were measured later). Further, we tested
and found a moderation effect in Study 1, which is
less likely to be explained by common method vari-
ance (Siemsen, Roth, & Oliveira, 2010). Still, in the
future, researchers using a self-report approach
should assess variables in three separate waves of
survey measures and may want to consider taking
preferences for pay disclosure into account (Smit &
Montag-Smit, 2018, 2019) in order to parcel out
variance in perceptions stemming from individual
differences in such preferences. Moreover, although
our theoretical framing based on UMT deemed dis-
tributive justice the most relevant justice dimension
2021 Alterman, Bamberger, Wang, Koopmann, Belogolovsky, and Shi
in testing the nuanced effects of pay secrecy on
turnover outcomes, employees may hold fairness
assessments about pay secrecy that are distinct from
their general or other policy-specific procedural and
informational justice perceptions. Future research
should seek to address how these multiple justice
dimensions may interact in determining employee
attitudes and behaviors.
Third, our findings may have limited generaliz-
ability beyond the Chinese or East Asian context.
Specifically, in Eastern cultures with relatively high
levels of collectivism (Colella et al., 2007; Triandis,
1989, 1994), pay secrecy might not be as controver-
sial as in the West. For example, in comparing out-
comes of secrecy policies in general and the trust of
citizens in their government, Grimmelikhuijsen,
Porumbescu, Hong, and Im (2013) found that se-
crecy has worse outcomes in cultures with low
power distance and low uncertainty avoidance
(e.g., Netherlands) than in cultures with high
power distance and high uncertainty avoidance
(e.g., Korea). In addition, in Study 1, we chose to
focus on a specific sample: executive MBA students.
Given that this sample may be interested in ad-
vancing their education to facilitate a job search, it is
possible that our dependent variable—turnover
intentions—was range restricted in Study 1, poten-
tially offering conservative estimates in our model.
However, our data actually show that the distribu-
tion of our turnover intentions dependent variable
had adequate variance (M 5 2.79, SD 5 0.97). Still,
executive MBA students all have college degrees
and seek managerial roles, thus limiting our find-
ings’ generalizability to other types of workers
(e.g., skilled, hourly). Further, we only had infor-
mation regarding whether employers were state
owned, private, or multinational in our Study 1
data;14 we did not have such ownership information
for the firms in our Study 2 sample. Consequently,
we encourage researchers to test the cross-cultural
generalizability of our findings, the generalizability
of our findings to additional employee populations,
and to research more in depth on potential differ-
ences between types of enterprise ownership when
assessing firm-level models of pay secrecy. Fu-
ture studies may also want to collect additional
14
We ran a supplemental analysis controlling for these
three firm types via two dummy-coded variables, and our
finding pattern remained virtually the same as those re-
ported in the manuscript for Study 1. Full results of the
analysis are available from the corresponding author upon
request.
503
characteristics of organizations in order to account
for any other potential effects these may have on firm
voluntary turnover rates. In our firm-level study, we
only controlled for industry, organizational age,
and organizational size, which were most likely to
potentially account for our observed effects. Never-
theless, we encourage researchers to collect addi-
tional organizational information in the future in
order to incorporate new control variables, such as
union status, diversity, other pay-related policies
(e.g., pay for performance), and organizational
climate, and expand existing knowledge from
Hausknecht and Trevor’s (2011) review on collective
turnover antecedents. Given our limited sample size
and thus limited power in Study 2, we also encour-
age researchers to replicate and extend our findings
using larger samples at the firm level to avoid po-
tential origination bias (Bliese & Wang, 2020). In
addition, it is important to note that, although our
data for Study 1 and Study 2 were collected in dif-
ferent years (2018 vs. 2013), the unemployment rates
were relatively low (around 4%) in both time pe-
riods. Thus, future research should investigate our
model in labor markets that may have fewer em-
ployment alternatives, such as a higher unemploy-
ment rate might suggest.
Fourth, notwithstanding the temporal distance
between our two questionnaires in Study 1 and the
objective measure used for firms’ voluntary turnover
rates in Study 2, we cannot rule out the possibility of
reverse causality—lower voluntary turnover rates
can drive the adoption of more “progressive”
(i.e., transparent) pay communication practices. In-
deed, researchers have previously advocated that
more successful organizations may be more likely to
implement HR practices perceived as more pro-
gressive, as compared to their less successful coun-
terparts (Wright, Gardner, Moynihan, & Allen, 2005).
As such, we encourage future research to better test
the causal effects of pay secrecy practice using more
sophisticated longitudinal designs. Further, as we
assessed firm pay secrecy practice via a single man-
ager’s rating, we also encourage future researchers to
use multiple manager ratings of firm HR pay prac-
tices to facilitate inter-rater reliability assessment
(Gerhart, Wright, McMahan, & Snell, 2000). Addi-
tionally, we did not test organizational trust as a
mediating mechanism in our firm-level study,
largely because there are questions as to the validity
of trust as a construct at the organizational level
(Fulmer & Ostroff, 2017). Moreover, there are con-
cerns regarding the meaningfulness of human-like
traits such as trustworthiness when ascribed to a
504 Academy of Management Journal
collective of humans, such as an organization, not to
mention questions as to whether such characteristics
accurately reflect the practices actually imple-
mented by organizations (Ashforth, Schinoff, &
Brickson, 2020). However, to the extent that such a
construct can be defined and operationalized in a
meaningful way at the collective level, we encourage
others to incorporate such a variable as a mediator
linking pay secrecy to voluntary turnover at the firm
level. Our use of an aggregation of individual em-
ployee assessments of their own distributive justice to
form the higher-level climate construct (i.e., a direct
consensus approach) may also have made for a con-
servative test of our firm-level model and we recom-
mend that future research assess distributive justice
climate from a referent shift approach (i.e., using the
unit as the referent in the climate measure); when
paired with unit-referenced outcomes, such an ap-
proach may yield stronger observed effects than ours
(e.g., Rupp, Bashshur, & Liao, 2007; Whitman et al.,
2012). From a climate perspective, we also encourage
others examining pay secrecy at this level to explore
how distributive justice climate strength may condi-
tion the moderating effects of distributive justice cli-
mate level. Also relevant here is the extension of our
study to the examination of supervisor-focused dis-
tributive justice climate, which could be assessed
based on fairness perceptions regarding supervisor-
assigned work schedules and workloads, and its
influence on supervisor-referenced unit outcomes.
Such future research may enrich our understanding
of a multifoci perspective on justice climate at the
unit level (Li et al., 2015; Skarlicki, van Jaarsveld,
Shao, Song, & Wang, 2016).
Finally, our findings offer only an initial step toward
uncovering the mechanisms and subsequent conse-
quences of pay secrecy practices at the individual and
firm levels. It is important to examine other potential
mechanisms driving the relationship between pay se-
crecy perceptions and turnover intentions (although it is
important to note that we do control for procedural and
informational justice as alternative mediators in our
main analysis). For example, future studies can examine
how less pay secrecy (i.e., greater transparency) may
impact turnover intentions via employees’ self-
evaluations of labor market standing. In addition, fu-
ture field studies can build on previous lab-based
studies investigating how pay secrecy influences other
relevant outcomes for employees, such as individual
task performance (Bamberger & Belogolovsky, 2010;
Belogolovsky & Bamberger, 2014), in order to model
how and when such individual-level pay secrecy con-
sequences translate into firm-level, performance-related
April
outcomes. Finally, as suggested above, scholars may
consider extending our model and findings regarding
pay secrecy and turnover to other administrative prac-
tices, examining how more or less disclosure about the
nature of these administrative practices may have sim-
ilar turnover-related implications. However, it is im-
portant to note that we examined overall voluntary
turnover rate and cannot be sure whether exiting em-
ployees were the ones that organizations would want to
leave (i.e., bad vs. good performers). Indeed, it is possi-
ble that our lack of empirical support for the negative
relation between pay secrecy and voluntary turnover
rates under lower distributive justice climate may be
explained by the fact that it is mostly excellent per-
formers (who represent a smaller proportion of the
workforce) who choose to leave, thus limiting the ob-
served variance in turnover that can be predicted. Ac-
cordingly, future research is needed to sort out the joint
effects of pay secrecy and distributive justice on quality
of leavers.
CONCLUSION
Findings from two studies—one at the individual
level and the other at the firm level—suggest that the
pay secrecy–turnover relationship is more nuanced
than suggested by conventional justice theories.
More specifically, as suggested by UMT, pay secrecy
practices likely affect turnover-related outcomes via
their impact on employees’ fairness judgments—
their trust in their organization. Of import, these
effects appear to be contingent on employees’ dis-
tributive justice perceptions, with uncertainty-related
fairness heuristic processes determining how such
perceptions combine with the inferences drawn from
pay secrecy practices to influence fairness judgments,
and subsequently turnover-related outcomes.
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Valeria Alterman (valterman@miami.edu) is an assistant
professor of management at the Miami Herbert Business
School, University of Miami. She received her PhD from
the Warrington College of Business, University of Florida.
Her research focuses on human resource management,
diversity and inclusion, compensation, and older worker
employment.
Peter A. Bamberger (peterb@post.tau.ac.il) is the Dom-
berger Chair in Organization and Management at Tel
Aviv University’s Coller School of Management. Former
editor-in-chief of Academy of Management Discoveries and
associate editor of Academy of Management Journal, his
research interests include automatic processes in human
interaction and pay communication. He received his PhD in
organizational behavior from Cornell University.
Mo Wang (mo.wang@warrington.ufl.edu) is the
Lanzillotti-McKethan Eminent Scholar Chair at the Uni-
versity of Florida. He received his PhD in industrial–
organizational psychology and developmental psychology
from Bowling Green State University. His research inter-
ests include older worker employment and retirement,
newcomer and expatriate adjustment, occupational health
psychology, teams and leadership, and advanced quanti-
tative methods.
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April
Jaclyn Koopmann (jmk0052@auburn.edu) is an associ-
ate professor of management and dean’s fellow at the
Raymond J. Harbert College of Business, Auburn Uni-
versity. She received her PhD from the Warrington Col-
lege of Business, University of Florida. Her research
focuses on self-regulation, team climate and helping
processes, and occupational health.
Elena Belogolovsky’s (elena.belog@gmail.com) research in-
terests include pay administration, organizational citizen-
ship behavior, and occupational health psychology. Her
research has appeared in such outlets as Academy of Man-
agement Journal, Journal of Applied Psychology, and Per-
sonnel Psychology. She received her PhD in behavioral
sciences and management from Technion—Israel Institute
for Technology.
Junqi Shi (shijunqi@zju.edu.cn) is a full professor in the
School of Management at Zhejiang University, China. He
received his PhD in industrial–organizational psychology
from Peking University. His current research interests in-
clude teams and leadership, work stress, occupational health
psychology, and older worker employment and retirement.
APPENDIX A
PAY SECRECY ITEMS
(1) My organization informally discourages em-
ployees from disclosing their pay to coworkers or
colleagues.
(2) My organization formally disciplines (by sus-
pending or firing) employees disclosing their pay
to coworkers or colleagues.
(3) My organization does not disclose the adminis-
trative procedures on how pay levels and pay
raises are determined for managerial, profes-
sional, and technical staff.
(4) My organization does not disclose the adminis-
trative procedures on how pay levels and pay
raises are determined for nonmanagerial or un-
skilled employees.
(5) My organization tries to discourage managerial,
professional, and technical staff from disclosing
their pay to coworkers.