Compensation: Effective Reward Management // Review

Article excerpt

Managing people in an organization requires an understanding of how to motivate employees through well - designed reward or compensation systems. This text's objective is to achieve this understanding in a coherent manner, while properly integrating motivational theories and management practices. The book is organized around a model of effective reward management derived from expectancy theory (Vroom, 1964; Lawler, 1971). This model is used to examine the nature of organizational rewards from a motivational perspective and to develop a diagnostic procedure for evaluating reward effectiveness. Most importantly, the text incorporates unique Canadian issues, legislation, and practices related to compensation management not simply as a afterthought but as a integral part of the presentation.

Following an introduction to the subject of compensation and the effective reward management model, the remaining chapters in the text are organized into four sections. Part 1 -- The Strategic Influence of Environment -- explores the impact of various factors, events, and institutions on the composition and goals of reward systems. Part II -- Theoretical Approaches to Compensation Design and Management -- examines content and process theories of work motivation as well as the determinants of pay satisfaction, including job design issues. Part III -- Processes and Techniques in Designing the Compensation System -- illustrates those methods which are critical to the success of reward systems. Part IV -- Managing the Compensation System -- addresses the key managerial issues and concerns in the design, administration, and evaluation of reward systems.

The book's uniqueness does not reside in the presentation of new research or theories but, as the authors recognize, in being a structured, logical guide to compensation theory and practice. The text is designed for use at both the undergraduate and graduate levels and as a resource by compensation specialists and management consultants. Accordingly, each chapter begins with a synopsis and a set of learning objectives and ends with a summary, a list of key terms, a set of review and discussion questions, and one or more practical exercises or cases. The material is beautifully written and clearly presented. The text is free of jargon and cliches. Constructs and technical terms are carefully defined and illustrated with practical examples, making the text highly readable and understandable for the average undergraduate.

Nonetheless, the text does have flaws. The four sections are not given equal coverage. Both Part I and IV consist of only one brief chapter each. Part I, which explores environmental constraints on reward systems is mostly a listing of those factors without any in - depth discussion. This approach would be acceptable if the influence of these environmental factors were meaningfully integrated into the following material; for the most part, they are not. The discussion related to the role of unions on compensation systems illustrates this point. The initial presentation amounts to a statement that "Unions, then, are a critical influence on organizations and their compensation programmes" (p. 25). Further references to unions consist of statements of the type that unions may be opposed to a certain technique or that union involvement or cooperation will be necessary for the success of a programme. While the authors do recognize that in many cases the reward system will be the product of union - management negotiations, they do not give the reader any insights into how negotiated systems compare to those where management is free to act unilaterally. …