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Accounting for the Gap: A Firm Study Manipulating Organizational Accountability and Transparency in Pay Decisions


  • Emilio J. Castilla

    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)


Great progress has been made in documenting how employer practices may shape workplace inequality. Less research attention, however, has been given to investigating which organizational strategies are effective at addressing gender and racial inequality in labor markets. Using a unique field study design, this article identifies and tests, for the first time, whether accountability and transparency in pay decisions—two popular organizational initiatives discussed among scholars and practitioners—may reduce the pay gap by employee gender, race, and foreign nationality. Through a longitudinal analysis of a large private company, I study the performance-based reward decisions concerning almost 9,000 employees before and after high-level management adopted a set of organizational procedures, introducing accountability and transparency into the company’s performance-reward system. Before such procedures were introduced, there was an observed gap in the distribution of performance-based rewards where women, ethnic minorities, and non-U.S.-born employees received lower monetary rewards compared with U.S.-born white men having the same performance evaluation scores and working in the same job and work unit with the same manager and the same human capital characteristics. Analyses of the company’s employee performance-reward data after the adoption of accountability and transparency procedures show a reduction in this pay gap. I conclude by discussing the implications of this study for future research about employer strategies targeting workplace inequality and diversity.

Suggested Citation

  • Emilio J. Castilla, 2015. "Accounting for the Gap: A Firm Study Manipulating Organizational Accountability and Transparency in Pay Decisions," Organization Science, INFORMS, vol. 26(2), pages 311-333, April.
  • Handle: RePEc:inm:ororsc:v:26:y:2015:i:2:p:311-333
    DOI: 10.1287/orsc.2014.0950

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    References listed on IDEAS

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    2. Gamage, Danula K. & Kavetsos, Georgios & Mallick, Sushanta & Sevilla, Almudena, 2020. "Pay Transparency Initiative and Gender Pay Gap: Evidence from Research-Intensive Universities in the UK," IZA Discussion Papers 13635, Institute of Labor Economics (IZA).
    3. Isabel Fernandez-Mateo & Sarah Kaplan, 2018. "Gender and Organization Science: Introduction to a Virtual Special Issue," Organization Science, INFORMS, vol. 29(6), pages 1229-1236, December.
    4. Jie Liang & Peng Shao, 2019. "Sequential Alliance Portfolios, Partner Reconfiguration and Firm Performance," Sustainability, MDPI, vol. 11(21), pages 1-20, October.
    5. Ruthanne Huising & Susan S. Silbey, 2021. "Accountability infrastructures: Pragmatic compliance inside organizations," Regulation & Governance, John Wiley & Sons, vol. 15(S1), pages 40-62, November.
    6. Colleen Flaherty Manchester & Sophie Leroy & Patricia C. Dahm & Theresa M. Glomb, 2023. "Amplifying the gender gap in academia: “Caregiving” at work during the pandemic," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 62(3), pages 288-316, July.
    7. Julian Kolev & Yuly Fuentes-Medel & Fiona Murray, 2019. "Is Blinded Review Enough? How Gendered Outcomes Arise Even Under Anonymous Evaluation," NBER Working Papers 25759, National Bureau of Economic Research, Inc.
    8. Kanze, Dana & Conley, Mark A. & Higgins, E. Tory, 2021. "The motivation of mission statements: How regulatory mode influences workplace discrimination," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 84-103.
    9. Eliot L. Sherman & Raina Brands & Gillian Ku, 2023. "Dropping Anchor: A Field Experiment Assessing a Salary History Ban with Archival Replication," Management Science, INFORMS, vol. 69(5), pages 2919-2932, May.
    10. Bennedsen, Morten & Larsen, Birthe & Wei, Jiayi, 2022. "Wage Transparency and the Gender Pay Gap: A Survey," Working Papers 17-2022, Copenhagen Business School, Department of Economics.
    11. Maria Rouziou, 2019. "The contingent value of pay inequalities in sales organizations: integrating literatures in economics, management, and psychology," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 184-204, December.
    12. Matthew Caulfield, 2021. "Pay Secrecy, Discrimination, and Autonomy," Journal of Business Ethics, Springer, vol. 171(2), pages 399-420, June.
    13. Tim Hermans & Martine Cools & Alexandra Van den Abbeele, 2021. "The role of information accuracy and justification in bonus allocations," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(2), pages 197-223, June.
    14. Emilio J. Castilla & Aruna Ranganathan, 2020. "The Production of Merit: How Managers Understand and Apply Merit in the Workplace," Organization Science, INFORMS, vol. 31(4), pages 909-935, July.
    15. Kevin Boudreau & Nilam Kaushik, 2020. "The Gender Gap in Tech & Competitive Work Environments? Field Experimental Evidence from an Internet-of-Things Product Development Platform," NBER Working Papers 27154, National Bureau of Economic Research, Inc.
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    17. Adina D. Sterling & Roberto M. Fernandez, 2018. "Once in the Door: Gender, Tryouts, and the Initial Salaries of Managers," Management Science, INFORMS, vol. 64(11), pages 5444-5460, November.

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