Coming soon · Book Profile

Compensation

A comprehensive textbook that provides a strategic framework for designing and managing compensation systems to drive organizational performance, ensure fairness, and maintain legal compliance.

A profile of this book is on the way.

Get the book →

What it’s about

In a world where talent is the ultimate competitive advantage, how you pay your people is more critical than ever. 'Compensation' moves beyond simplistic views of pay as a mere expense, reframing it as a powerful strategic tool to shape employee behavior and drive business results. Grounded in the authors' evidence-based Pay Model, this book dissects the essential components of any effective system: internal alignment, external competitiveness, employee contributions, and overall management. It provides a robust framework to tackle the toughest compensation challenges, from structuring salaries and designing incentive plans to managing benefits and ensuring legal compliance. By exploring the critical 'incentive' and 'sorting' effects of pay, the book demonstrates that it's not just about how much you pay, but how you pay, that truly matters for attracting, retaining, and motivating a high-performing workforce.

The through-line

Who it’s for: A Human Resources professional, business manager, or student who needs to understand how to design and manage compensation systems that effectively support organizational goals.
The problem: Designing a pay system that attracts and retains top talent, motivates performance, and controls costs is incredibly complex and fraught with pitfalls. Competitors are constantly vying for the best people, legal regulations are ever-changing, and traditional pay systems often fail to drive desired results. They feel overwhelmed by the complexity of compensation and frustrated because their pay systems are often perceived as unfair, disconnected from strategy, or simply a costly entitlement. They lack a clear, evidence-based framework to make and defend their compensation decisions.
The plan: Master the Pay Model: Understand the core components of any pay system—objectives, policies, and techniques.
Achieve Internal Alignment: Learn to analyze and evaluate jobs to create a logical, fair, and defensible internal pay structure.
Ensure External Competitiveness: Learn how to use market data to set competitive pay levels and mix pay forms effectively.
Drive Performance: Discover how to design pay-for-performance plans and benefit packages that motivate desired employee behaviors.
Manage the System: Master the techniques for budgeting, communicating, and evaluating the entire compensation system to ensure it achieves its goals.
The payoff: You will become a confident compensation expert, able to design and manage a system that attracts and retains top talent. · Your organization will see improved performance and engagement as pay is clearly linked to strategic objectives. · You will be able to control labor costs effectively while ensuring your pay practices are perceived as fair and are legally compliant.

See our guide

Design A Compensation System →

Related profiles we’ve built

Additional reading

Human Resource Champions · David Ulrich
The preface references this as a landmark book in the effort to define HR core competencies and the role of HR as a strategic business partner.
The Human Side of the Enterprise · Douglas McGregor
Mentioned in the preface as a key influence in shifting the perspective from 'personnel administration' to 'human resource management,' providing historical context for the evolution of the HR function.
The Compensation Handbook, A State-of-the-Art Guide to Compensation and Design · Berger, L.A., and D.R. Berger, editors
This book provides a deep dive into the practical application of finance and accounting; a broader handbook like this one would provide context on the design elements (internal/external equity) that this book deliberately does not cover in detail.
How to Be a Star at Work: 9 Breakthrough Strategies You Need to Succeed · Robert E. Kelley
Referenced to support the idea that a key trait of high performers is their ability to leverage learning opportunities, which is a core tenet of the book's framework for excelling as a compensation professional.
Average Is Over: Powering America Beyond the Age of the Great Stagnation · Tyler Cowen
Cited to highlight the increasing economic value of individuals whose skills are complementary to computers, underscoring the book's argument that 'soft skills' and strategic thinking are becoming critical for compensation professionals in a data-driven world.
Drive: The Surprising Truth about What Motivates Us · Daniel H. Pink
Cited as a contrasting viewpoint that questions the efficacy of financial incentives, highlighting the importance of autonomy, mastery, and purpose. This is relevant to the book's deep focus on designing effective incentive systems.
Creative Destruction: Why Companies That Are Built to Last Underperform the Market · Sarah Kaplan and Richard N. Foster
Referenced to illustrate the increasing pace of change and business complexity, which provides the context for why compensation professionals need to be more strategic and business-savvy.
Beyond HR: The New Science of Human Capital · John W. Boudreau and Peter M. Ramstad
Listed as an additional resource to provide a deeper dive into the strategic management of human capital, which is a central theme of the handbook.
Pay and organizational effectiveness: A psychological view · Lawler, E. E., III (1971)
This is cited as a foundational text that comprehensively applied psychological theories, particularly expectancy and equity theory, to understand how pay systems affect employee motivation and behavior.
Economics, organization & management · Milgrom, P., & Roberts, J. (1992)
Serves as a key reference for the 'new economics of personnel,' particularly agency theory. The book uses its concepts to frame decisions about behavior- vs. outcome-based contracts and the challenges of incentive design.