Template
Compensation · Template
Compensation Philosophy Template
A complete framework for designing and documenting how your organisation pays people. Built for transparency when hiring, and clarity when making pay decisions internally.
Welcome
Use this template to design and document your own compensation philosophy. You can share it externally to build trust when hiring, or keep it internal if you prefer. It draws on Open Org experience and dozens of public handbook examples from companies like Juro, Whereby, PostHog, Checkly, Sourcegraph, and others.
Each section includes Open Org guidance, handbook examples from real companies, and a checklist of what to document. Work through them in order, or jump to the components that matter for your stage.
When you are ready to turn this into your own version, hit Build this for me with AI at the bottom of the page. Open Org Workspace AI will walk you through adapting the template to your context and produce a document you can export to Word or paste into Notion.
How we think about compensation
Start with principles, business context, and a clear definition of what compensation means in your organisation.
Our goals and guiding principles
See how others do it
Checklist for this section
- Guiding principles and/or goals documented
How compensation fits into our business model
See how others do it
Checklist for this section
- Explanation of how compensation fits commercially
How we define compensation
See how others do it
Checklist for this section
- Definition of compensation in your business
- Breakdown of what makes up compensation here
Compensation components
Deep dive into each part of the compensation stack. Optional components are marked - skip what does not apply.
Core
Base pay
4 sections
Optional
Equity
If you offer equity, RSUs, or similar.
1 section
Optional
Bonus
If you offer bonuses to anyone in the business.
1 section
Optional
Commission
If you offer commission to anyone in the business.
1 section
Core
Benefits and perks
1 section
Compensation component
Base pay
How we calculate and benchmark pay
See how others do it
Checklist for this section
- How often do you benchmark?
- Where do you get your data from?
- What percentile do you pay, and why?
- An employee can read this and trust their salary was calculated fairly and they know how they are paid vs the wider market
Pay calculator
See how others do it
Checklist for this section
- Share pay calculator (optional)
How we review pay
See how others do it
Checklist for this section
- When we review pay for all employees
- How the pay review cycle and process works
- How pay review links (or not) to performance
- What might lead to individual pay reviews
- The decision-making process and who is involved
Salary bands
See how others do it
Checklist for this section
- Share access to whole company or team-level bands (optional)
- Explain how bands work in your business
Compensation component · Optional
Equity
If you offer equity, RSUs, or similar.
How equity works here
See how others do it
Checklist for this section
- What is 'equity'?
- Why you offer it
- How do we calculate and manage it?
- Who does and does not get it?
- Example exercising scenarios
Compensation component · Optional
Bonus
If you offer bonuses to anyone in the business.
How bonus works here
See how others do it
Checklist for this section
- How do bonuses work here?
- Who does and does not get it, and why?
- How do we calculate and manage them?
- Example scenarios for ad-hoc, discretionary bonuses
Compensation component · Optional
Commission
If you offer commission to anyone in the business.
How commission works here
Checklist for this section
- How does commission work here?
- Who does and does not get it, and why?
- How do we calculate and manage it?
- Example scenarios for not receiving or having to pay back commission
Compensation component
Benefits and perks
Our benefits
See how others do it
Checklist for this section
- How do you think about benefits here?
- How do you pick them?
- Who does and does not get certain benefits?
- How are benefits reviewed? Are they subject to change?
A word on levelling and performance
See how others do it
Checklist for this section
- Explain or share salary bands or career development framework
- Explain performance review process and how it links to pay decisions and progression
How we review pay
See how others do it
Checklist for this section
- Explain how regularly you benchmark and review pay
- Share where you get benchmarked data from
- Share how you use that data to guide decisions (e.g. percentiles you aim for)
- Talk about additional factors or occasions for individual pay reviews
Triggers for changes in pay
Be open about moments that trigger pay changes or conversations about pay. Helps manage expectations. Think about relocations, promotions, and inflation. Also be clear about what might not lead to a pay rise.
Document triggers
- Scheduled compensation reviews
- Role promotions or scope changes
- Market rate increases in benchmark data
Approval required
- Location changes that increase pay
- Off-cycle adjustments
- Exceptional performance recognition
What might not change pay
- Be clear when a rise is not possible
- Set expectations on inflation vs benchmarking
- Document factors outside review cycles
How we pay you
See how others do it
Checklist for this section
- Payroll
- Expenses (e.g. how you spend company money and how we reimburse you)
- EOR / PEO information (why we use one, benefit to you and us, any elements not applicable to EOR employees)
FAQs
Pre-empt common employee questions. Use these as starters and add your own as they come up.
How often will my pay be reviewed?
Document your answer here as you build out your philosophy.
How do promotions affect my salary?
Document your answer here as you build out your philosophy.
What happens if I relocate to a different country?
Document your answer here as you build out your philosophy.
How does equity vesting work here?
Document your answer here as you build out your philosophy.
Inspiration and resources
Public compensation philosophies and further reading from practitioners.
Inspiration from other companies
Further reading
If you need additional help
Equity
Tamas Varkonyi and Spela Prijon at EquityPeople
More open resources
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