CAN BUSINESS VALUE STEM FROM PAY TRANSPARENCY AND PAY EQUITY?

Summary

Horila's 2025 research paper, "CAN BUSINESS VALUE STEM FROM PAY TRANSPARENCY AND PAY EQUITY?", addresses a critical research gap by empirically examining the impact of pay transparency and pay equity on business value. The study emerged amidst growing regulatory landscapes, such as the EU Pay Transparency Directive, and evolving employee expectations for fairness and accountability. The core objective was to explore if and how business value creation, particularly financial performance as reflected in Return on Investment (ROI), can be derived from these practices, and to identify key considerations for companies implementing such changes. Additionally, the thesis aimed to deepen understanding of the linkages between pay transparency and pay equity within the broader context of Diversity, Equity, and Inclusion (DEI). The methodology employed a qualitative research approach, focusing on a single global heavy equipment company as a case study. Data was gathered through 20 semi-structured interviews with employees of the case company. The interview data was then rigorously analyzed using the Gioia methodology, a structured and transparent approach designed to identify key concepts, themes, and aggregate dimensions from qualitative data. This in-depth, single-company focus allows for a nuanced understanding of perceptions, implementation, and leverage of pay transparency and equity-related practices in a real-world organizational setting. The qualitative nature also aimed to uncover the intricate mechanisms through which these practices might influence business value, moving beyond a simple correlational analysis. The study's key findings indicate that while pay transparency and pay equity are not yet fully embedded in business strategies, their significant potential effects on various organizational aspects are increasingly recognized. These effects include enhanced employee trust, motivation, engagement, retention, productivity, and innovativeness. Furthermore, these practices are seen to strengthen an organization's position with external stakeholders, including potential future employees and investors, thereby enhancing employer branding. The research highlights that business value can stem from these improvements through various indirect mechanisms. However, the study also notes that capturing these potential benefits requires overcoming related challenges and proactively addressing them, beginning with an evaluation of the company's current state and internal/external expectations. The implications extend to strategic human resource management, providing a case study perspective on how these elements are perceived as potential drivers of business value creation, suggesting that their significance goes beyond mere compliance.