The Power of Transparency

Abstract

Does the dissemination of organizational financial information shift power dynamics within workplaces, as evidenced by increasing workers’ wages? That is the core question of this investigation. We utilize the 2004 and 2011 series of the British Workplace Employment Relations Survey (WERS) to test whether employees who report that their managers disclose workplace financial data earn more than otherwise similar workers not privy to such information. Our findings suggest that disclosure results in higher wages for workers after adjusting for profit and productivity levels and a range of other workplace and worker characteristics. We estimate that workers who report their managers are “very good” at sharing organizational financial information outearn those who report their managers are “very poor” at financial disclosure by between 8 and 12 percent. We argue that disclosure is a key resource that reduces information asymmetries, thereby providing legitimacy to workers’ claims in wage bargaining. More broadly, our focus on managerial transparency and its effects on worker earnings reveals a largely ignored characteristic of modern workplaces that has implications for contemporary trends in inequality and wage stagnation in Great Britain and other liberal market economies.

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