Abstract

Purpose - The purpose of this paper is to investigate the effect of risk aversion (RA) on expected income and job satisfaction (JS) with pay in the case of sales agents under a compensation system based on pay-for-performance. Design/methodology/approach - Data were collected from 125 sales agents of an outbound call center via questionnaires and controlled experiments. Seemingly unrelated equations using maximum likelihood estimation was employed to estimate the proposed model and test relationships. Findings - Findings show that income expectations (IE) respond to a model of trade-off between value and risk. The sales agents trade off their expected value of performance (i. e. expected income) with RA. Additionally, IE and actual performance of the salesperson have influence on JS with pay with opposite signs. Research limitations/implications - The results of this research may need to be modified to consider jobs with compensation systems with a higher proportion of fixed component of the wage than the variable component. Also, a broader concept of JS and not just related to the pay, should be considered. Practical implications - Given the importance of RA in the attitudes of employees in relation to their expectations, the authors believe that it should be necessary and useful to incorporate measures of RA in the process of selection and recruitment for these jobs. Originality/value - This paper assessed an important element as the RA at the micro level inside of an organization. This element could be very important for job environments with high uncertainty in income that could influence JS via employee expectations.