.jpg "The Importance of Having a Compensation Philosophy")
Paula West
April 24, 2025
Media ArticleThe opening session of the AgCareers Agriculture & Food Roundtable Compensation Summit was presented by Denise Jarvis, Compensation Director, MRA, and began by laying the foundation for a collective understanding of compensation philosophy, its importance, and what to include in one. Her 25 years of experience in Human Resources has provided her with a specialization in all areas of compensation.
Denise explained that a compensation philosophy is a formal statement of how your company rewards their employees. This statement encompasses payment, benefits, employee development and employee work environment. It helps to communicate compensation, outlines employee commitment, and helps employers create a positive culture, as goals and expectations are set for all. This formal statement includes what defines the competitive market and data from reliable sources based on financial position, market compensation data, marketplace changes and business objectives.
What is the importance of having a Compensation Philosophy? First, it outlines the approach to compensation for staff. When compensation is clear, employees can feel that there is a fair structure for everyone. Secondly, it helps the staff understand how compensation works. When employees understand ‘total rewards,’ which includes items not limited to base pay, bonuses, health insurance, paid time, and flexible working hours, this transparency often increases employee peace of mind and motivation. Finally, it helps employers understand the approach and supports budget management and legal compliance.
Compensation Philosophy must be reviewed annually to ensure they are current with company changes and reflect changes in the marketplace. It is a suitable time to review what the company set out to do vs. what it did as an organization.
Survey your employees to understand how they perceive your compensation efforts. Provide opportunities for you to receive questions and concerns from your employees. This can lead to an increased level of employee satisfaction, which can result in a boost in company loyalty, resulting in less turnover.
Your philosophy statement must be flexible and adaptable to allow for updates without compromising the whole statement. If there are massive changes within the company, the compensation philosophy statement may need to be reworked to ensure it is legally compliant.
Are you not sure what to include in your compensation philosophy? Denise provided us with six essential components to start you off:
When you have a well-written, well-communicated philosophy within your company, you are saying this is what we believe in and how we will implement that. A strong statement should help retain your employees and attract top talent to join your team.
To learn more about compensation, the AgCareers.com Compensation Benchmark Review is reliable data released fully compliant with the Federal Trade Commission's Anti-Trust Act provisions for salary surveys. To participate, please email compensation@agcareers.com
