The influence of pay transparency on organizational citizenship behavior

Outcomes of recent institutional advances towards pay transparency on the individual level remain as unclear as resulting consequences for organizations due to scarce research. Particularly, the prevalent literature reveals a lack of studies which investigate the effect of pay transparency on organizational citizenship behavior (OCB). To provide clarity regarding the impact of pay transparency on OCB, this study uses a legislative change in Germany which requires the disclosure of selected pay-related information by regulated organizations to empirically investigate the transparency-OCB relation. To further address a common critique of pay transparency concerning potential negative effects of pay comparison among peers, relative standing is integrated as moderator to examine how the comparison of individuals’ pay to that of referent others affects the link between pay transparency and OCB. Contrary to the theoretically derived expectations, pay transparency unfolds a significant negative effect on OCB while a moderation by relative standing cannot be supported. In joint consideration with other studies, findings imply that different forms of pay transparency can create varying consequences for OCB. Besides, the results aim to raise awareness among managers that disclosing pay-related information with little informativeness, or refrained disclosure are not optimal responses to regulatory changes towards more pay transparency as such strategies may result in a detrimental effect of pay transparency on OCB. Keywords: Pay transparency; Organizational citizenship; Compensation.Outcomes of recent institutional advances towards pay transparency on the individual level remain as unclear as resulting consequences for organizations due to scarce research. Particularly, the prevalent literature reveals a lack of studies which investigate the effect of pay transparency on organizational citizenship behavior (OCB). To provide clarity regarding the impact of pay transparency on OCB, this study uses a legislative change in Germany which requires the disclosure of selected pay-related information by regulated organizations to empirically investigate the transparency-OCB relation. To further address a common critique of pay transparency concerning potential negative effects of pay comparison among peers, relative standing is integrated as moderator to examine how the comparison of individuals’ pay to that of referent others affects the link between pay transparency and OCB. Contrary to the theoretically derived expectations, pay transparency unfolds a significant negative effect on OCB while a moderation by relative standing cannot be supported. In joint consideration with other studies, findings imply that different forms of pay transparency can create varying consequences for OCB. Besides, the results aim to raise awareness among managers that disclosing pay-related information with little informativeness, or refrained disclosure are not optimal responses to regulatory changes towards more pay transparency as such strategies may result in a detrimental effect of pay transparency on OCB. Keywords: Pay transparency; Organizational citizenship; Compensation