The Mediating Role of Procedural and Distributive Justice in the Relationship Between Pay Transparency and Talent Retention

Pay transparency has gained prominence as a strategic human resource practice aimed at addressing pay inequities and wage disparities; however, the mechanisms through which transparency influences employee retention remain insufficiently understood, particularly in generationally diverse workforces. The present study investigated the direct and indirect effects of pay transparency on talent retention, with a specific focus on the mediating roles of procedural and distributive justice. A quantitative, cross-sectional research design was employed, drawing on survey data from 464 employees in the South African banking sector. Data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) via SmartPLS 4.0, with 5,000 bootstrap samples, to test direct relationships and parallel mediation effects among pay transparency, procedural justice, distributive justice, and talent retention. The results revealed that pay transparency has a significant positive effect on talent retention. Pay transparency was further found to positively influence both procedural justice and distributive justice, highlighting its role in shaping fairness perceptions. Procedural justice partially mediated the relationship between pay transparency and talent retention, whereas distributive justice did not. The hypothesised serial mediation pathway was not supported, suggesting that procedural and distributive justice operate as independent parallel mechanisms rather than sequentially. These findings extend Social Exchange Theory, Equity Theory, and Organisational Justice Theory by clarifying how justice-based mechanisms translate transparent pay practices into retention outcomes. From a practical perspective, the study demonstrates that organisations can enhance talent retention through transparent, procedurally fair pay systems, particularly for retaining younger workforce cohorts who value openness and fairness.