The HR Hub What Is 'Compensation Philosophy'? And Why You Need One.
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Feb 25, 2025 
Carolyn Kildare, owner of Cadence Compensation Consulting and former Mercer executive, dives into the world of compensation philosophies. She outlines how a robust compensation philosophy acts as a guiding principle for aligning pay with business goals. Topics include the dangers of paying new hires more than loyal employees and the impact of market pressures on compensation strategies. Carolyn emphasizes the importance of transparency, fairness, and crafting a philosophy that supports a performance-driven culture. It's a high-stakes conversation that doesn't have to be overwhelming!
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Starting with Compensation Philosophy
- Start by identifying a compensation problem within your organization.
- Then, define your goals and how compensation can help achieve them.
Purpose of a Compensation Philosophy
- A compensation philosophy guides your approach to employee rewards.
- It reflects your company's values, desired talent, and business direction.
Addressing Employee Variety in Compensation
- Consider the skills, experience levels, and job roles within your company.
- Determine if you'll offer consistent compensation across different employee groups.