Abstract
This qualitative case study investigated pay perceptions and compensation communication in for-profit companies in the Midwestern United States. The purpose of this study was to explore how pay-related communication can be improved to benefit employees and their organizations. Labor costs are the primary expense of most organizations. The ability to optimize compensation strategies to attract and retain a high-performing workforce is vital to organizational success.
Interviews were conducted with 15 Millennial generation employees to capture what they know about compensation and learn what would increase their pay satisfaction. Employees articulated how they think about pay, what pay means to them, why it is a difficult topic to address, and what advice they would provide to their organizations on communicating pay.
The findings were analyzed using the lenses of symbolic interactionism, social solidarity and secrecy theories. Three main conclusions surfaced: (1) Employees have limited knowledge of how pay works; (2) Most employees value transparency around compensation; and (3) The link between pay and performance is unclear. This research did confirm the lack of compensation information restricts participants from understanding the relationship of pay and performance. A pay transparency continuum and a pay communication assessment model were provided to assist organizations in determining their pay communication approach. Three recommendations were identified to help organizations enhance pay communication: (1) Recognize the impact of pay secrecy on pay equity perceptions; (2) Determine the right level of transparency for the organizational culture; and (3) Transform managers into communication ambassadors for compensation. A future area of study to extend this research would be the influence of organizational culture on pay program design and communication strategy.