Publication Date



Key Findings:

  • Pay secrecy adversely impacts individual task performance because it weakens the perception that an increase in performance will be accompanied by increase in pay;
  • Pay secrecy is associated with a decrease in employee performance and retention in pay-for-performance systems, which measure performance using relative (i.e., peer-ranked) criteria rather than an absolute scale (see Figure 2 on page 5);
  • High performing employees tend to be most sensitive to negative pay-for- performance perceptions;
  • There are many signals embedded within HR policies and practices, which can influence employees’ perception of workplace uncertainty/inequity and impact their performance and turnover intentions; and
  • When pay transparency is impractical, organizations may benefit from introducing partial pay openness to mitigate these effects on employee performance and retention.


Recommended Citation
Belogolovsky, E., & Bamberger, P. A. (2014, March). Signaling in secret: Pay-for-performance and the incentive and sorting effects of pay secrecy (CAHRS ResearchLink No. 1). Ithaca, NY: Cornell University, ILR School, Center for Advanced Human Resource Studies.