Today’s agriculture producers have become much more than farmer/producers of food, fiber or energy. Whether they recognize it or not, they have become not-so-small business operators. As business operators, they have also become significant employers. For many rural communities, farms are among the largest employers in the community. As employers, these farmers regularly face the question of how to adequately compensate employees for their contribution to the business and still remain profitable.
Employees expect to be fairly compensated for their contribution to the business. Compensation packages should be fair and equitable internally (within the business) and externally (within the community).
Compensation can also be in three types: Direct Compensation (monetary), Non-Monetary (i.e. flexibility of scheduling, work opportunities for family, produce, meat, etc.), and Indirect-Compensation (training opportunities, use of vehicles or equipment, retirement package options, etc.). The key point to any package and its components is to be sure it contains what employees really want and value.
According to surveys, direct compensation makes up about 80% of the typical compensation package but since that is the portion directly seen by the employee, it needs to be reflective of the market for skills offered by the employee.
In the end, a farm’s compensation package should show the employee that he/she is valued for the contributions they make to the success of the farm business and that you want to help make the employee successful in life as well.