Scaling Up Compensation: 5 Design Principles for Turning Your Largest Expense into a Strategic Advantage

by Verne Harnish, Sebastián Ross

How you compensate people is one of the most important strategic decisions your company will make - but few "get it right and out of sight." Nail it and you can add hundreds of percentage points to the bottom line while driving up the energy in the organization. Make the wrong call (or piecemeal the decision together), and the results will create needless drama throughout the organization. Do any of these challenges sound familiar? "I gave a star performer a raise, and now everyone else is marching into my office, demanding one, too.""If anyone looked closely at our payroll, it would be hard to rationalize why we're paying certain people what we do.""I'm tired of losing our best people to the Googles of the world because we can't match their salaries." Compensation is one of your largest expenses, one you can turn it into a strategic advantage in attracting, retaining, and motivating talent (or not accidentally demotivating them). In this highly practical book, the authors share 5 principles for designing effective compensation systems along with plenty of examples from leading small, medium, and large firms across various industries. You'll The #1 mistake business leaders make in setting up their compensation plansThe psychological aspects of compensation underpinning successful plansHow individual bonuses can backfireThe power of gamifying gains to drive up energy and engagementWhether you want to be queen/king or rich!

Genres: Business, Buisness, Management

161 pages, Kindle Edition

Published July 2, 2021

Reviews

[Denis Vasilev · Rating 4 out of 5]

Неплохо, но немного сумбурно

[Artila · Rating 5 out of 5]

Packed with valuable real-world examples!

[Andreas Constantinou · Rating 5 out of 5]

As a follower of Verne Harnish (and a member of the Entrepreneur Organisation which he founded over 30 years ago), I jumped straight into his latest book Compensation.
It’s a short book, but it’s packed with research and examples of how companies can structure their compensation, from salaries to bonuses and share options. The book breaks down an otherwise complex topic into 5 key topics:
* Designing your company’s compensation philosophy before designing your compensation scheme. For example what caliber of staff do you want to attract? Do you want to incentive competition or solidarity?
* Creating a pay structure that’s coherent, but also flexible to accommodate high performers
* Being careful with financial incentives, as most bonus plans do not drive performance, and instead become entitlements and cause undesirable behaviors (we re all irrational beings after all!)
* Gamifying gains so that staff interests are aligned with company interests - including some eye opening examples
* Getting employees to think like owners with share option plans
Having spent many hours and days designing and redesigning compensation schemes for my company, I feel this is the first book that breaks down the complexity, and provides a clear guide for both novice and seasoned CEOs. A must-read for all entrepreneurs.

[Karen ⊰✿ · Rating 4 out of 5]

What to pay your employees, when to offer increases and incentives, and the level of transparency you share are some of the most difficult decisions to make in growing small-medium sized businesses. To make it worse there isn’t a lot of information out there to help business owners answer these questions.
This book really helps to cut through some of those difficult decisions, but ultimately every business is going to be different and so although this doesn’t give the answers it should give enough to spark ideas that can then be discussed with your HR Partner and Accountant.
It is US based so some of the information, particularly around stock options won’t be applicable to all regions. But I still recommend this as a short book to help get your compensation strategy right for your business.

[Rocky Sunico · Rating 4 out of 5]

While not a direct "companion" piece to Scaling Up, it is strong supplementary material to help map out an effective compensation strategy that can work with the principles of Scaling Up. In the same way that a lot of Scaling Up feels like it was drawn from Good to Great, you can feel that a lot of this book draws from The Good Jobs Strategy, which is a nice framework to tackle.

It's a quicker read that doesn't have as many citations as the original Scaling Up but also has a very strong US fous in terms of the pay concerns and structure. It can still work outside the US, but you'll need to invest some time to adapt it fully.

[Georges Elchakieh · Rating 5 out of 5]

good read for any executive, struggling with pay

I enjoyed the book I would recommended to any executive. It’s hard to keep track of all the information and what is best for you, in the end you have to do what is best for your company and there’s no real model that fits all, but all the examples will give you enough insight so you can develop your own pay structure for your company and to serve your your culture.

[Daniel · Rating 4 out of 5]

Decent book, I expected a bit more. Namely, step by step guidance on setting up a comp system for a team or org. It's almost exclusively about design principles and examples shared in a story format. Some parts felt heavily salesy but the saving grace of this book are the good sources and the Appendix (never said that before). More like a 3.5/5 than a 4/5.

[John C. Dudley · Rating 5 out of 5]

Great read!

Fantastic! Just what I was looking for. The best overall book I've seen on compensation that isn't overly technical that covers a wide range on what it takes to put together good compensation packages.

[Rotem Rotenberg · Rating 4 out of 5]

understanding mindsets around compensation

Critical thought is needed when deciding payment structures and incentives - this book provides clarity and great reference documents and charts for implementation - worth a read

[Hanim backwards · Rating 5 out of 5]

great book. i’ve never taken so many useful notes from a book as much as i did with this one.

[Tony Creech · Rating 5 out of 5]

The second I finished it I knew I was going to read it again, this year.
For business builders and executives this is a must read if you want to think more on and learn how to scale

[Jonathan Bernwieser · Rating 3 out of 5]

Some good impulses but nothing particularly new that I was able to take out of if

[Luke · Rating 3 out of 5]

Lovely

[David Guest · Rating 4 out of 5]

Some great ways to connect pay to productivity

[Michael MacRae · Rating 5 out of 5]

Overly opinionated but the huge amount of value, examples, and ideas, all packed in a very short read more than make up for it.

[Jaakko Suojanen · Rating 5 out of 5]

really good compensation book

Best book to read if you want to understand the basics of compensation. Easy to read and gives many more book suggestions about the topic.

[Kelly M. · Rating 5 out of 5]

Excellent read for anyone interested in building an effective compensation strategy.

[Joe Nuttapong · Rating 4 out of 5]

Good content on how to set compensation for employee. Cover enough concept and case studies that help you understand and decide which one to use.

[Bill Fahrner · Rating 5 out of 5]

A “Must Read” for Leaders of Growing Organizations

Packed with valuable insight and resources, Verne Harnish has curated a masterpiece on the challenging topic of compensation. He provides more value per page than any other book I have read on this topic. Thank you, Verne!

[Jamie · Rating 5 out of 5]

Compensation is a pillar or business, and a key organisational framework. So immensely valuable.