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This text is really designed for those compensation practioners that want to understand how compensation might be used to supply a sustainable competitive advantage. The authors' deep reading and involvement in both research and consulting with business shows here. They worked very hard to allow us to absorb the research implication and to use the tools, without our having to read the full body of research or to invent the tools.
The authors balance the research perspective by developing a working model and applying it to real world cases where they have consulted. The reader is then challenged to apply the model to case situations presented in the book and to their work practice.
Lastly, some things i've learned from this book:
1. you get what you pay for ... -- the research clearly shows that pay is a key motivator and that people will behave as they're incentivized by their pay systems. -- the implication is that EVERY compensation system, no matter whether it's planned or evolves, supplies a network of incentives that in part direct employee behavior and business outcomes.
2. compensation systems can be designed to support a sustainable competitive advantage. -- through understanding the motivational incentives and how they tie into business strategy. -- a "universalistic" compensation approach that says there's one right answer supplies some good practices, but doesn't fully explain observed motivational differences.
3. Compensation must tie tightly to the work process (work flow) or it will surely fail in it's objectives. -- how many companies talk about changing their cultures while they don't change or even understand the motivational impacts of their pay plans?
4. There's no right answer, only a good model to help. -- is a tournament pay system (tied to an individual / hierachical workflow) better than an egalitarian system (tied to a team workflow)? it depends ... and that's where Milkovich/Newman fill in the blanks.
A M-U-S-T read for anyone participating in making compensation decisions - whether you're in school or already a compensation vice president.
I was so impressed that I used this as a recommended book of the week in my [...] newsletter [...]!
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Newman's sound warnings against the overreaching of scientific fields and the triumph of smug materialism and positivism are still urgent, of course. Newman is also careful to point out that the liberal arts and even theology may attempt to establish a single, inadequate framework for the discovery of truth.
Newman's complex epistemology does not fall prey to the heresy that truth is not one, but reminds us that in our present state, truth present various aspects and that the tyranny of any particular branch of knowledge is the victory of ignorance.
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The strength of the book is that it extracts and builds on key research findings in a way that advances the body of compensation knowledge (in a way pleasing to academics) and is relevant to practitioners. Chapter 2 on Strategic Perspectives and Chapters 9 & 10 on Pay for Performance best exemplify the confluence of research relevance and tactical usefulness.
It is absolutely a must read for anyone who is a student of organizations or who attempts to manage one (not just compensation managers).