In theory, a compensation philosophy is a formal written statement that reveals the company's stance on employee pay and rewards. Compensation philosophies vary from company to company. However, they often involve addressing the "what," "why," "how," "how much" and "how often" of employee rewards in a manner that aligns with the company's mission, vision and strategic objectives. Ultimately, the result is a synchronized set of practices and policies that guide decision-making when it comes to creating and distributing compensation.
If you run a business with employees, you have at some point wondered how you should compensate them for good work. It's actually a much trickier task than people realize. You have to take into account employee morale, employee performance and market averages. To get a fuller picture of how to fairly distribute raises to your employees, keep reading.
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