Compensation

Beverly J. DeMarr, Ph.D., is a Professor of Management at Ferris State University where she regularly teaches classes in Human Resources, Compensation, and Negotiations. She received her Ph.D. in Organizational Behavior/Human Resource Management and Master of Labor and Industrial Relations from Michigan State University, MBA from Grand Valley State University, and BSBA from Aquinas College. Dr. DeMarrs other textbooks are Compensation: A Balanced Approach (DeMarr, Taylor, & Ferrante, 2026) and Negotiation and Dispute Resolution 2e (DeMarr & de Janasz, 2019). She has also published articles in Personnel Psychology, Journal of Business Ethics, Human Relations, Public Personnel Management, the International Journal of Conflict Management, and Management Teaching Review (MTR). Dr. DeMarr is an active member of the Academy of Management (AOM) and the Management and Organizational Behavior Teaching Society (MOBTS) and regularly presents at their annual conferences. She was awarded the AOM Management Education Divisions (MED) J.B. "Ben" Arbaugh Outstanding Member Contribution & Leadership Award in 2024, MTRs Best Pedagogical Contribution Award for 2021, and a number of teaching awards. She currently serves on the Journal of Management Educations Editorial Review Board and is a Mentoring Program Coordinator and Executive Committee Member for MED. She also chaired AOMs All-Academy Teaching Theme Committee from 2016-2019. Vicki Fairbanks Taylor is an Associate Professor of Management at Shippensburg University of Pennsylvania, where she regularly teaches classes in Human Resources, Leadership, and Compensation. She earned her Ph.D. in Human Resource Management from Temple University, a Masters in Labor and Industrial Relations from St. Francis University, and a BSBA from Shippensburg University. Dr. Taylor published Experiential Exercises in the Classroom (Foster, Taylor, & Walker, 2021) in addition to numerous teaching-related articles and exercises. In 2021, she received the Best Pedagogical Contribution Award for an article published in Management Teaching Review. Dr. Taylor is an active member of the Academy of Management, Eastern Academy of Management, and the Management and Organizational Behavior Teaching Society. She presents regularly at annual conferences and has served on the Academy of Management Teaching Learning Conference, the Eastern Academy of Management Board, and the Experiential Learning Associations Board. Dr. Taylor is a Fellow of the Eastern Academy of Management and serves as the SHRM Chapter Advisor. She also provides leadership training and organizational consulting services to local businesses. Claudia J. Ferrante is a Professor of Management at the United States Air Force Academy where she regularly teaches classes in Organizational Behavior, Human Resource Management, and Management Consulting. She earned her B.S. in Biology from Bucknell University, MBA and Master of Health Administration from the University of Pittsburgh, and Master of Public Policy and Management and Ph.D. in Organizational Behavior from Carnegie Mellon University. Her publications include book chapters in The Economics of Aquatic Sports and Educating for Values-Driven Leadership Across the Curriculum, as well as numerous articles in journals such as Human Resource Management, Journal of Management Education, Group and Organization Management, Business Horizons, Journal of Management Policy and Practice, The Journal of Effective Teaching, Organization Development Journal, and the Journal of Engineering and Technology Management. Dr. Ferrante is an active member and annual conference presenter for the Academy of Management (AOM) and Management and Organizational Behavior Teaching Society. She was awarded the AOM Management Education Divisions (MED) J.B. "Ben" Arbaugh Outstanding Member Contribution & Leadership Award in 2024, and currently serves as AOMs Career Services Committee Coaching Coordinator and as a Mentoring Program Coordinator for MED. In addition, Dr. Ferrante chaired AOMs All-Academy Teaching Theme Committee from 2013-2016. She has received numerous awards for her teaching, research and service efforts.

Preface Acknowledgements About the Authors 1. Total Compensation Nature Of The Employment Relationship Perspectives On The Importance Of Compensation From Total Compensation To Total Rewards Worldatwork Total Rewards Model The Unintended Consequences Of Pay Ongoing Challenges: Pay Equity Overview Of The Book Summary Key Terms Discussion Questions 2. Laws Affecting Compensation Fair Labor Standards Act Prevailing Wage Laws Anti-Discrimination Laws Legal Compliance Summary Key Terms Discussion Questions 3. Compensation Strategy and Objectives Shifting Focus From Shareholders To Stakeholders Types And Levels Of Strategies Using Compensation Strategically Compensation Objectives Influences On Compensation Strategy The Impact Of Compensation Strategy On Behavior Matching Compensation Strategy To The Organizations Business Strategy Compensation As A Competitive Advantage Summary Key Terms Discussion Questions 4. Bases of Pay, Variations, and Differentials Pay Structures: Defining The Value Of Jobs Human Capital Theory: Determining The Value Of Employees Job-Based Pay Person-Based Pay Variations On Job- And Person-Based Pay Compensating Differentials Efficiency Wage Theory Sorting And Motivational Effects Of Differentials And Bases Of Pay Reservation Wage Summary Key Terms Discussion Questions 5. Establishing an Internally Equitable Compensation System Internal Equity Job Analysis Competency Modeling: An Alternative to Traditional Job Analysis Job Evaluation: Determining The Relative Value Of Jobs Within An Organization Alternatives To Job Evaluation The Role Of Ai In Creating An Internally Equitable Compensation System Market Pricing Summary Key Terms Discussion Questions 6. External Equity And Designing A Market-Competitive Pay Structure Creating A Market-Competitive Pay Structure Analyzing External And Internal Factors Influencing A Market-Competitive Pay Structure Determining The Competitive Pay Policy Collecting Market Data Integrating The Internal Job Structure With The External Market Data Establishing Pay Grades And Pay Ranges Multiple Salary Structures Market-Based Pay Structure: An Alternative To A Market-Competitive Pay Structure Summary Key Terms Discussion Questions 7. Rewarding Individual Performance Motivating Employees Through Incentives Measuring Performance Performance Appraisal Methods Merit Pay Bonuses Commission Piecework Standard Hour Plans Summary Key Terms Discussion Questions 8. Rewarding Group Performance Types Of Groups Measuring Group Performance Challenges In Rewarding Group Performance Types Of Rewards Gainsharing Plans Profit Sharing Incentive Stock Options Employee Stock Ownership Plans Nonfinancial Group Incentives Summary Key Terms Discussion Questions 9. Legally Required Benefits Legally Required Employee Benefits Social Security Unemployment Compensation Workers Compensation Family And Medical Leave Act (FMLA) Uniformed Services Employment And Reemployment Rights Act (USERRA) Patient Protection And Affordable Care Act (ACA) Additional Legal Requirements Summary Key Terms Discussion Questions 10. Voluntary Benefits Legal Requirements Employer-Sponsored Retirement Plans Health Insurance Alternatives Paid Time Off Other Miscellaneous Benefits The Importance Of A Needs Assessment Flexible Benefits/Cafeteria Plans Managing The System Summary Key Terms Discussion Questions 11. Compensation of Special Groups Sales Supervisors Contingent Workers Directors Executives Unionized Workers Two-Tier Pay Plans Part-Time Summary Key Terms Discussion Questions 12. International Compensation Data Sources National Differences And Requirements Categories Of International Workers Expatriate Pay And Benefits Cost Containment Repatriation International Assignments: Pros And Cons Summary Key Terms Discussion Questions 13. Compensation System Administration Managing Compensation Communication Pay Transparency Addressing Employee Fairness Concerns Managing Compensation Costs Evaluating Effectiveness: Audits, Metrics, And Employee Feedback From Metrics to Analytics Managing Change Summary Key Terms Discussion Questions 14. Compensation in Context: Putting It All Together Putting The Pieces Together Careers In Compensation The Future Of Compensation Work-Life Balance Making It Personal Summary Key Terms Discussion Questions Appendix: Responsible Furniture Industries, Inc. (RFI)