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Step 2:
Write a Compensation Philosophy

An illustration of a scroll of paper with some words that represent company values to demonstrate a compensation philosophy

What's a Compensation Philosophy?

A compensation philosophy explains the "why" and “how” behind how you reward your employees. It can help you make fair and consistent compensation decisions that align with your organizational goals. Reassessing your compensation philosophy every 3 to 5 years is a healthy practice to ensure it remains relevant and aligned with your evolving goals and objectives.

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Start by articulating your company’s mission, values, culture, and key objectives. These will help you decide what to incentivize.


What might this look like? Imagine a conservation non-profit that prioritizes education, community engagement, and work-life balance. To meet those priorities, the organization offers market rate salaries with a robust professional development program, remote and flexible work options, and days off for participation in community volunteering opportunities.

Try this exercise (with examples) to craft your own compensation philosophy

Tools to Write a Compensation Philosophy

Compensation Philosophy Worksheet: Use this worksheet to help you establish a compensation philosophy for your organization.

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