Job insecurity and compensation evaluations: the role of overall justice

Abstract

Purpose – The purpose of this paper is to examine the relations of job insecurity with pay and incentive satisfaction and the role of overall justice in these relationships. Design/methodology/approach – The authors surveyed employees of an industrial equipment sales firm located in the Southeastern USA. Surveys were completed by 151 employees using instruments assessing job insecurity, overall justice, pay satisfaction, and incentive satisfaction. Findings – The study results indicated job insecurity is negatively related to both pay and incentive satisfaction. Further, the study found that overall justice mediated the job insecurity to pay satisfaction relationship, but not the job insecurity to incentive satisfaction relationship. Research limitations/implications – Because overall justice only explained the job insecurity-pay satisfaction relationship, future research should examine other potential mediators to better understand these disparate effects when compared with incentive satisfaction. Future research should also examine the model with a larger sample using a time-lagged design to further mitigate the limitations of the study. Practical implications – The results of this study suggest that employees who contain a strong fear of job loss tend to experience reduced pay and incentive satisfaction levels. Managers should do what they can to limit the impact of job insecurity on these attitudes and provide additional training to employees in coping strategies so that they might better deal with the job insecurity stressor. Originality/value – Integrating the literatures on stress appraisal and organizational justice, the empirical model provides understanding of how job stressors and perceptions of organizational justice influence pay and incentive satisfaction.