A compensation philosophy is more than a document – it’s a compass. It provides direction, clarity, and confidence for making compensation decisions around salaries, bonuses/incentives, rewards and benefits in an organization. It forms the basis for employee compensation by aligning the company’s mission, vision, strategic objectives, and values. Several factors influence a company’s compensation philosophy, including leadership, culture, industry, and resources. Typically, a Compensation Committee or specified team is involved in developing the philosophy and designing the compensation structure. A well-rounded Compensation Philosophy has a total rewards approach including salary structure and raise/promotional models.
Without a compensation philosophy, companies are reactive in compensation decision making often times not supporting their goals and objectives as an organization. We believe that having a compensation philosophy assists the company in a more proactive, purposed strategy approach that supports its objective, culture and leadership style. It gives guiding principals for compensation decisions so that decision making can be more objective when needed. It also allows the company to adopt a refined philosophy or practices in compensation that can navigate a volatile economic market.
We encourage a total rewards philosophy. We try to understand what makes the company tick, how they are different, who they are, where they are and where they are going. We tailor compensation philosophies that reinforce those goals.
Zayla helps you design a compensation philosophy that encompasses both direct and indirect rewards in the best way that aligns with your end goals as a company. We set you up for success and give you the confidence that the total picture is not only market competitive, but allows you to pay when performing well above market value, keeping your talent motivated and compensated.
Fun Facts:
We advise companies to look at compensation as a wholistic approach, otherwise known as Total Rewards. This strategy has two parts: direct and indirect rewards.
Direct Rewards:
Direct rewards are base salary, annual and long-term incentives, recognition rewards and benefits programs.
Indirect Rewards:
Indirect rewards are work life balance, hybrid/remote work, culture, succession planning, and purpose driven work.
A compensation philosophy is a guideline for your company to determine how to compensate employees so that their goals also align with company goals . Following are common FAQs.
If you have any inquiries about compensation philosophy development, do not hesitate to contact us today.
