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McCoy, Thomas J. Compensation and Motivation: Maximizing Employee Performance with Behavior-Based Incentive Plans. New York: AMACOM, a division of American Management Association, 1992. Pp. 320. $59.95
This book is an effort to apply behavioral psychology to the determination and allocation of compensation in organizations. The author advocates behavior-based incentive compensation (BBIC) as an approach to performance improvement through achieving important goals of human resource management: attracting, retaining, and motivating all levels of employees.
BBIC is presented as a tool for compensation managers to use as a guide for the effective planning and implementation of incentive compensation systems. The author presents a model of BBIC to explain the relationship between compensation and motivation by illustrating the importance of achieving a balance between the needs of each employee and the organization. The model emphasizes the importance of considering intrinsic and extrinsic rewards when developing incentive pay systems. The important connection between these rewards and organizational effectiveness/economic value is analyzed.
BBIC is described as differing from traditional compensation in three primary areas: (a) it requires consideration of human resources in addition to financial concerns, (b) it is contingent upon performance, and (c) it is flexible in its ability to produce improvement in any organizational need. With significant efforts underway in many organizations to improve levels of employee commitment, a compensation approach that emphasizes the satisfaction of employee needs in the effort to improve performance is likely to be well received by employees and managers. A number of managers might argue that their firm's compensation system attempts to link pay to performance, although their system may not include incentive compensation. This would include organizations that have attempted to refine merit pay and performance appraisal systems to include more emphasis upon the link between pay and performance. The issue of flexibility could apply also in firms without incentive compensation. The bottom line question may be: Is incentive compensation an important approach for achieving the link between pay and performance? The author provides a very good explanation of BBIC and how it may be implemented in organizations to achieve this important link. It is also possible to achieve the link without BBIC, although perhaps not to the same degree of effectiveness.
The author believes an important challenge for the...