Pay Secrecy And Organizational Loyalty

The policy of pay secrecy was first produced and developed in the companies in Europe and America. In the past few years more and more enterprises in China began to implement pay secrecy policy. Based on the literature review, we can find that there are a lot of positive and negative effects. On the one hand, it protects employees’individual privacy, avoid their comparison and reduce the internal conflict and employee turnover. However, on the other hand, it may decrease the perceived organization justice and mutual trust, and cut down the employees’satisfaction and self-motivation, reduces the organizational loyalty and their performance.In this article, We generate and test a moderated mediation model of the effects of pay secrecy--a pay communication policy restricting employees’ access to information regarding the level of other employees’ pay and some other information about the pay in the organization-on individual organizational loyalty. According to this model, the effects of such a policy are posited to be mediated by distributive fairness perceptions and procedural fairness perceptions, moderated by interpersonal competitiveness (an individual difference variable).Using a questionnaire survey, our findings generally support this model. We get the following conclusions:(1)Pay secrecy and employee fairness perceptions has a significant negative correlation.(2)Pay secrecy and organizational loyalty also has a significant negative correlation.(3)Distributive fairness perceptions and organizational loyalty has a significant positive correlation; Procedural fairness perceptions and organizational loyalty also has a significant positive correlation. (4)Distributive fairness perceptions and Procedural fairness perceptions play a intermediary role between pay secrecy and organizational loyalty.(5)Interpersonal competitiveness moderates the adverse effect of pay secrecy on employee procedural fairness perceptions. For those people of highly Interpersonal competitiveness, a policy of pay secrecy was found to be directly associated with a lower level ofdistributive fairness and procedural fairness perceptions. However, Interpersonal competitiveness can’t moderate the mediating effect of employee fairness perceptions on organizational loyaltyAt last, The implications of the findings for research and practice are also discussed. We also hold that enterprises that implement pay secrecy policy should not ignore the importance of pay equity. At the end of this paper, we point out the limited condition of the pay secrecy policy. Then we also put forward some constructive suggestions about how to adopt the policy of pay secrecy and try out best to make it play a positive and constructive role.