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Theory, Evidence, and Strategic Implications

August 2003 | 320 pages | SAGE Publications, Inc
`Gerhart and Rynes provide a thorough, comprehensive review of the vast literatures relevant to compensation. Their insights regarding the integration of economic, psychological and management perspectives are particularly enlightening. This text provides an invaluable tool for those interested in advancing our understanding of compensation practices' - Alison Barber, Eli Broad College of Business, Michigan State University

Compensation provides a comprehensive, research-based review of both the determinants and effects of compensation. Combining theory and research from a variety of disciplines, authors Barry Gerhart and Sara Rynes examine the three major compensation decisions - pay level, pay structure and pay delivery systems.

Revealing the impact of different compensation policies, this interdisciplinary volume examines: the relationship between performance-based pay and intrinsic motivation; implications of individual pay differentials for team or unit performance; the consequences of pay for performance policies; effect sizes and practical significance of compensation findings; and directions for future research.

Compensation considers why organizations pay people the way they do and how various pay strategies influence the success of organizations. Critically evaluating areas where research is inconsistent with common beliefs, Gerhart and Rynes explore the motivational effects of compensation.

Primarily intended for graduate students in human resource management, psychology, and organizational behaviour courses, this book is also an invaluable reference for compensation management consultants and organizational development specialists.

David A. Whetten
Introduction to the Series
1. Introduction: The Enigmas of Compensation
Outline of the Book  
2. Differences in Pay Level: Why Do Some Companies Pay More Than Others?
A Tale of Two Markets  
The Case for Limited Discretion: Neoclassical Economic Theory  
Post-Institutional Economics: Theory Meets Reality  
Why It May "Pay" to Pay More  
The International Dimension  
Differences in Pay Levels for Particular Jobs  
Research on Pay Level Decision Making  
Resource 2.1  
3. Effects of Pay Level: What Do Employers Get in Return for Higher Pay?
Theories of the Importance of Pay to Individuals  
What Do Employers Get in Return for Higher Pay Levels?  
Future Research  
4. Pay Structure: Relative Pay Within Organizations
The Role of Jobs and Job Evaluation in Pay Structure  
Theories of Differences in Pay Structure  
Work-Life Incentives  
Empirical Research on the Effects of Pay Structure  
Future Research  
5. Pay Basis: Theories of Motivation and Pay for Performance
Effects of Pay and Motivational Programs on Performance: Meta-Analytic Results  
Theories of Pay-Performance Relationships  
Psychological Versus Economic Perspectives  
Workforce Composition, Sorting, and Personality-Based Theories  
Future Research  
6. Pay-for-Performance Programs: Empirical Evidence
Broad Policy Decisions  
Putting It All Together: Empirical Evidence on Pay Programs  
Future Research  
7. Pay Strategy
Strategic Fit and Alignment  
Beyond Generic Strategies: The Resource-Based View of the Firm  
Beyond Direct Earnings: Total Rewards  
Summary and Future Research  
8. Toward the Future
Future Research  
Methodological Recommendations  
About the Authors

"Gerhart and Rynes provide a thorough, comprehensive review of the vast literatures relevant to compensation. Their insights regarding the integration of economic, psychological, and management perspectives are particularly enlightening. This text provides an invaluable tool for those interested in advancing our understanding of compensation practices."

Alison E. Barber
Broad College of Business, Michigan State University

"The authors artfully synthesize complex scholarly articles from economics, psychology, and sociology. The organization of the book is exceptionally transparent... Compensation should be accessible to a wide range of readers who appreciate a multidisciplinary perspective on organizational issues... I cannot emphasize enough how effectively Gerhart and Rynes discuss compensation thoughout this book. As an experienced academic researcher, I have already benefited tremendously from my first reading of the book . It is a must-read, and I recommend it without reservation to instructors, researchers, and students."

Joe Martocchio
University of Illinois

Compensation is an excellent review of the current state of employee compensation... It is an excellent way to stimulate the thinking of those involved in research on organizational reward systems and should be required widely of doctoral students and others with a research interest in the topic... One of the strongest features of this book is its clear theoretical orientation to the topics covered. What’s more, the text is not so much an introduction to those theories as a way of challenging the reader to think through implications on a bit more sophisticated level... The book is an excellent reference work for researchers and advanced students.”


I found this book very interesting. The chapters each cover good discussion of the topic and the authors are well respected. I personally found chapter 2 to be helpful in framing the economic theories of rewards.
Having said this, I have not adopted the book for the course because the structure does not really follow the structure of the module (which has to remain the way it is for accreditation reasons) and therefore it was difficult to map particular chapters to particular lectures in a way which would be helpful for students. I have however found the book useful myself and include a couple of references to it in my lectures and my own notes.

Dr Danielle Tucker
Essex Business School, University of Essex
July 1, 2015

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