"In a recent study published by the Academy of Management Journal, Prof. Peter Bamberger of Tel Aviv University's Recanati School of Business and Dr. Elena Belogolovsky of Cornell University's School of Industrial and Labor Relations have published a study that explains why pay secrecy is likely to hurt an individual's work performance and prompt top talent to seek new employment. They conclude that pay secrecy weakens the perception by employees that a performance improvement will be accompanied by a pay increase. It also finds that high-performing workers are more sensitive than others when they perceive no link between performance and pay; suggesting that pay secrecy could limit a company's ability to retain top talent."
So who, if anybody, benefits from pay secrecy?
If you can keep from paying your employees well, you can claim a greater percentage of their productivity for yourself. Who cares what the net effect is on the long-term viability of the company?
While this is arguably a viable strategy, it is not the only strategy used by employers. There are many companies which aim to offer top salaries and/or benefits packages in their sector. I offer Starbucks (benefits), Chipotle (internal promotion), and Costco (pay rate) as examples of companies which have consciously chosen this path.
Despite all common sense, it's better to maximize performance/profits from your employees without regard to their happiness. In fact it could easily be argued that not paying your employees well is best for the company. Exploiting people (workers) is what this game is all about.
True, but that is a fine line to walk. Keep your salaries too low and your employees will quickly look for jobs elsewhere. Also, I am much more likely to go above and beyond for an employer that is going above and beyond for me. So I believe, in some ways, taking care of your employees is taking care of the company.
It sounds like he's describing the current short-term "MBA driven" approach.
Japan has the largest number of long running companies (75+ years) in the world. That includes both large and small companies. They treat their employees very well. Western investors often undervalue them due to high wage costs and staff benefits, but Japanese companies count people as an asset.
If a company wants to be around in 50 years time it should value its employees. If the CEO just wants to get rich quick and then get out exploitation is the name of the game. From an employee's point of view a company that treats them badly is likely to fail anyway, so might as well look for something better right away.