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  • Lara Lima e Gabriel Soares da Cruz

Pay Secrecy

What are the Benefits of pay secrecy:

For many years, it was typical at organizations have a policy that prohibits employees talk about their payments at the workplace. So, we can define pay secrecy as the lack of information about workers’ payment.

And why this is interesting for employers?

One of the reasons is because it has the potential to apply for many people across jobs, organizations and industries and also can reflects social or cultural values that are expressed through its practice

What are the costs of pay secrecy:

There are some costs that affect organizations when they use the policy of pay secrecy. One of them is that employee motivation can be decreased because pay secrecy break the linkage of pay-performance that suggests motivation. Therefore, if employees don´t know the worth of their outcomes, they’ll become less committed to achieve the goals of the company.The other cost that we can refer is that employee judgments about fairness and their perceptions of trust may be sacrificed. One reason this might happen is because the uncertainty of not knowing the wages of your colleagues can lead a feeling of anxiety at the workplace. And the employees who are faced with pay secrecy get more worried about if their payment is fair. Pay secrecy generates information asymmetry, so another cost that we can observe that affects organizations is that labor market may be less efficient. And this point is bad for both sides because the company doesn’t get the best employees for the jobs and workers don’t fit well in the job. Thus, the employees will not move to their highest valued used.

What are the Benefits of pay secrecy:

Although pay secrecy may have some costs, it is clear that it must also have benefits. The policy of the pay secrecy protects the privacy of the employees by not disclosing their salaries , in our society , in general privacy has become a major concern ,discussing about salaries can reveal a lot of information about us , most people would be more comfortable answering questions about personal family matters such as religion—or even perhaps sex—than about their salary (BBC News, 2004; Bierman & Gely,2004). The policy of pay secrecy by avoiding discussions about salaries helps to keep a civil, peaceful workplace, free from conflicts. In fact, avoiding conflicts is one of the main reasons managers give for enforcing pay secrecy. Finally, pay secrecy can actually benefit organizations with respect to labor market immobility. Although the labor market inefficiency resulting from pay secrecy may be a cost to society as a whole and some employers in particular.Danzinger and Katz (1997) argue that a policy of pay secrecy prevents employees from comparing their wages with others inside the firm, as well as wages of the firm with those in the job market. Such comparisons are needed for employees to switch jobs when it is to their advantage to do so.

Conclusion :

Should be clear that not all companies will face at the same degree the costs and benefits for example A organization that has many high-quality employees also has high recruiting and training costs, should be more likely to use pay secrecy than an organization that does not. Otherwise an organization with employees having a low need for privacy, but with a history of organizational unfairness and distrust, should not use a pay secrecy policy. For this organization, pay openness could help with perceptions of fairness and trust, as well as potentially improve work motivation and performance

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