Pay Communications and Fairness: An Employee Perspective

Abstract

A variety of tools are used to create perceptions of fairness including job evaluation, pay surveys and merit pay guide charts, but without effective pay communications the benefits of fair pay programs can be lost. Increased access to information about pay (e.g., salary.com, O’net and Monster.com), along with increased use of social media where personal information is routinely shared, has changed employee attitudes about pay transparency and information employers should communicate about pay. This study examines the relationships of pay communications, pay transparency and pay understanding with employee perceptions of pay fairness. Data collected from 300 full-time employees across as many organizations found that pay understanding mediated the relationship between pay communications and pay fairness, while controlling for gender, education level, age and income level of respondents. When pay communications was controlled for in mediation analysis, variance attributed to pay transparency disappeared.