A 5++ - the best BUSINESS text i've read. This is the first book i've read where i both grew intellectually and in tactical/application skills. This compensation text is quite unusual in that it effectively reduces huge bodies of research in business strategy, economics, organizational behavior and compensation to provide a holistic business model to analyze compensation decisions - all in the first three chapters. The Milkovich/Newman approach creatively blends a conceptual underpining (the why) with tactical details (the what and how). This blending allows them to supply enormous value by reducing the myriad of compensation decisions to 4 major pieces. The utility of this elegance is that long after reading the book or taking a course using this book, you'll still remember the framework and steps to both build from scratch and to adjust a compensation system - not just the what, but the why. i personally felt quite empowered and ready to take on compensation work after reading this text.
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.
