This chapter treats pay in nonprofits and the public sector, where the organization’s objectives are not as straightforward as in the typical for-profit firm. It also covers small businesses, a subject which is neglected in standard compensation texts but which is important because some readers are or aspire to be small-business managers. The opening section defines the 3 entities under discussion. Organizational missions and workers’ intrinsic motivation are described, which relates to compensating differentials in that workers who value the organizational mission interpret it as a non-monetary component of pay that creates an incentive to work hard to further the mission. The chapter revisits external and internal constraints on pay, training (and recruitment of desired worker types), performance pay, and turnover, thereby tying the book’s earlier concepts together. Subjects that were covered in earlier chapters are re-examined through the different lenses of nonprofits, the public sector, and small businesses. The chapter ends with coverage of “distance” between managers and owners, which tends to be shorter in small businesses than in larger ones, and its implications for pay.

We started this book with a glimpse into data and data science. Then we spent the rest of the book, especially Parts II and III, learning various tools and techniques to solve data problems of different kinds. Our approach to all of this has been hands-on. And now we have come full circle. As we wrap up, it is important to take a look at where that data comes from, and how we should broadly think about analyzing it. This final chapter, therefore, is dedicated to those two goals, as you will see in the next two sections. One section is an overview of some of the most common methods for collecting/soliciting data, and the other provides information and ideas about how to approach a data analysis problem with broad methods. Then the final section provides a commentary on evaluation and experimentation.

This chapter responds to the growing importance of business analytics on "big data" in managerial decision-making, by providing a comprehensive primer on analyzing compensation data. All aspects of compensation analytics are covered, starting with data acquisition, types of data, and formulation of a business question that can be informed by data analysis. A detailed, hands-on treatment of data cleaning is provided, equipping readers to prepare data for analysis by detecting and fixing data problems. Descriptive statistics are reviewed, and their utility in data cleaning explicated. Graphical methods are used in examples to detect and trim outliers. The basics of linear regression analysis are covered, with an emphasis on application and interpreting results in the context of the business question(s) posed. One section covers the question of whether or not the pay measure (as a dependent variable) should be transformed via a logarithm, and the implications of that choice for interpreting the results are explained. Precision of regression estimates is covered via an intuitive, non-technical treatment of standard errors. An appendix covers nonlinear relationships among variables.

“Just as trees are the raw material from which paper is produced, so too, can data be viewed as the raw material from which information is obtained.” To present and interpret information, one must start with a process of gathering and sorting data. And for any kind of data analysis, one must first identify the right kinds of information sources.

previous chapter, we discussed different forms of data. The height–weight data we saw was numerical and structured. When you post a picture using your smartphone, that is an example of multimedia data. The datasets mentioned in the section on public policy are government or open data collections.

This chapter treats pay in nonprofits and the public sector, where the organization’s objectives are not as straightforward as in the typical for-profit firm. It also covers small businesses, a subject which is neglected in standard compensation texts but which is important because some readers are or aspire to be small-business managers. The opening section defines the 3 entities under discussion. Organizational missions and workers’ intrinsic motivation are described, which relates to compensating differentials in that workers who value the organizational mission interpret it as a non-monetary component of pay that creates an incentive to work hard to further the mission. The chapter revisits external and internal constraints on pay, training (and recruitment of desired worker types), performance pay, and turnover, thereby tying the book’s earlier concepts together. Subjects that were covered in earlier chapters are re-examined through the different lenses of nonprofits, the public sector, and small businesses. The chapter ends with coverage of “distance” between managers and owners, which tends to be shorter in small businesses than in larger ones, and its implications for pay.

This chapter introduces some terminology and themes that pervade the book. Compensation is defined broadly to include everything a worker likes about the job. “Strategic compensation” is about managing the compensation system to advance a specific organizational objective, typically profit maximization. The chapter discusses how this relates to talent management, turnover, retention, and employee productivity. Four recurring themes are introduced: (1) “Incentive effects” and “sorting effects (both of which affect the company’s labor productivity) arise when the compensation system is changed; (2) Market competition largely dictates pay levels, whereas employers have more control over pay design; (3) Competition forces employers to care about their employees’ preferences about pay; (4) Bargaining power also affects pay levels. The metaphor of a “3-legged stool” is introduced, in which compensation depends on workers’ desires, skills, and mobility. There’s discussion of what constitutes “fair” pay and the tradeoffs associated with allowing employees to know each other’s pay versus keeping compensation secret. The appendix offers a detailed treatment of nominal versus real compensation.