Effects of pay transparency on application intentions through justice perceptions and organizational attractiveness

In the current investigation, we test the proposition that applicants make inferences about how an organization treats its employees based on its pay transparency policy. Specifically, we tested a serial mediation model in which pay transparency positively influences applicants’ intentions to apply to a job opening through increased fairness perceptions and organizational attractiveness. We randomly assigned participants to a condition in which they read the profile of a company that implements pay transparency versus a condition in which the company had a policy of pay secrecy. The participants were invited to imagine themselves on the job market and then indicate: (a) the extent to which they felt the company treats its employees fairly, (b) their attraction to the company, and (c) their intent to apply to a position in the company. Results were consistent with the proposed mediation, suggesting that an organization’s pay transparency policy may signal to applicants the extent to which the company values equity and justice. We conclude with some concrete strategies for attracting qualified applicants based on these findings and suggest avenues for future research