Editor's Note: This week's Thought Leader is Dr. Jerry Newman, SUNY Distinguished Professor at SUNY Buffalo. Most of us in the field know Dr. Newman as co-author of the classic text Compensation (2010), now on its 10th edition. He is also author of the book My Secret Life on the McJob: Lessons in Leadership Guaranteed to Supersize any Management Style (McGraw-Hill, 2007), selected as one of the twelve "Best of 2007" by the Wall Street Journal. Dr. Newman has also written approximately 100 articles on compensation and other Human Resource issues. In more than 30 years of consulting, he has worked with such companies as Cummins Engine, AT&T, Hewlett-Packard and McDonalds.
Compensation Force: What led you to choose (or land in) a career featuring the field of rewards?
Jerry Newman: I don’t think I chose a career in rewards. Rather, it was my safe haven from impending insanity. Let me explain. As a graduate student at the University of Minnesota I was studying in the field of Industrial Psychology – think theory as it’s applicable to the world of work. I was particularly impressed with equity theory because of the focus on fairness and the power of this construct to motivate individual behavior. While equity theorists dabbled in broadly explaining how concerns about fairness affected human behavior, there was almost no discussion of practical tools to channel this behavior. This observation wasn’t the first time I was frustrated, and perhaps maddened, by the sterility of theory. Yes, I know, nothing is so practical as a good theory. But at the time I didn’t understand how to make the leap to practical applications. It took a very smart man to help me make this leap. Onward to Question 2.
Compensation Force: What person and their ideas/teaching/writing has had a significant influence on your thinking and your work?
Jerry Newman: The University of Minnesota Campus is curiously divided by the Mississippi River. Because Psychology was housed on the East side of the river, I seldom wandered to the West Bank. By the end of my second year in the Ph.D program, though, the desire for practical applications of theory drove me to look for courses in the Business School that might offer a better blend of theory and practice. I was fortunate to enroll in a course on Compensation Administration offered by Professor George Milkovich. Early in that course George talked about the design of job evaluation systems for determining the worth of jobs with very different content. I still remember him stressing the importance of perceived fairness. At one point he even made the almost heretical comment that fairness was as important as validity! Think about this. Science is based on the search for valid theories and valid predictions from those theories. To even suggest that validity might need to be compromised if it offended employees’ sense of fairness struck me as enlightening. A perfectly valid job evaluation system might dictate that two jobs be paid equally. But if the perception was that this wasn’t fair, true or not, what do you do? In a practical world you search for some solution that marries validity and fairness. This conclusion, spurred by George’s comment, has been an important part of my thinking on rewards and the design of reward systems ever since.
Compensation Force: Is there a book you’d recommend to others in the reward field that has impacted your thinking and your work?
Jerry Newman: Yes, Stranger in a Strange Land (Robert Heinlein). I know, science fiction seems like a strange bedfellow with the field of rewards. But Heinlein introduced a character in this classic work called, I believe, the First Witness. This person’s role was to see the world as it actually existed. In one scene from the book the First Witness pointed at a house and asked the main character what he saw. The response was, of course, “a house.” The First Witness said he saw only one wall of the house. The remaining walls were merely conjecture subject to actual observation. I’ve always thought that observation was important for the design of reward systems. Behavior is a very tricky thing. We jump to conclusions way too quickly about what we think we are seeing. Diagnosing what we are seeing demands that we see the “building” from all four sides. This observation served me well when I was working undercover to write my book My Secret Life on the McJob. As an undercover crew member at 7 different fast food restaurants, I spent 14 months writing observations about “one side of the house”. When I was finished I pulled together observations that were internally consistent. I think this methodology helped my book achieve Book of the Year status with the Wall Street Journal (shameless self-promotion here).
Compensation Force: Looking to the future, what trend or development do you think will significantly impact the reward profession and those of us working in it?
Jerry Newman: I’m hoping the answer to this question is increased recognition of the importance of rewards beyond money. McDonald’s, a company that I greatly admire, spends much of its considerable HR talent on the design of non-monetary rewards. How, for example, do you make a workplace more fun without compromising quality? McDonald’s (and other Quick Service Industry giants such as YUM Brands and Burger King) are exploring the importance of Social Networks in the design of fun work environments. I think that is so cool. Let’s do more of this kind of challenging reward design work.
Compensation Force: What are you currently working on?
Jerry Newman: George Milkovich and I wrote a book almost three decades ago. We called it Compensation. We’ve been fortunate that it continues to be well-received. Part of the reason for this positive response, we think, is because we place great emphasis on the importance of non-monetary rewards. In the book we talk about 13 rewards, only one of which is money. I continue to explore ways to increase the importance of these other 12 in the mindsets of those who design reward systems and those who benefit from them. It’s a fun life!
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Our special thanks to Jerry for participating in the Compensation Force Thought Leader series and taking the time to share some of his history, thoughts and ideas with us today!
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