Written by: Lola Han, CEO & Founder of Kamsa

Early in my consulting career, I asked a CEO a question: “What’s your compensation philosophy?” He looked at me and said, “I have no idea.”

And it taught me something I’ve never forgotten: Most leaders haven’t really thought about their compensation philosophy. They just know when something feels…off.

So, What Is a Compensation Philosophy?

A compensation philosophy is your company’s guiding approach to how and why you pay people. It’s the foundation for making decisions that are consistent, explainable, and fair.

But here’s the truth:
Many companies either don’t have one — or they’ve adopted something too vague to be useful.

What Questions Actually Help Define a Compensation Philosophy?

If you’re in a compensation leadership role, here’s what to ask your CEO and executive team — and what to avoid — when trying to shape a comp strategy that reflects your organization’s real needs:

❌ "What’s our compensation philosophy?"

✅ “What’s the biggest comp-related frustration managers or employees have right now?”

→ (Perceived unfairness? Retention risks?)

❌ "What market percentile do we want to target?"

✅ “Where have we chosen to pay at vs. above market — and why?”

→ (Reveals past trade-offs & priorities)

❌ "Are employees leaving because of pay?"

✅ “What’s our turnover rate, and what patterns are showing up in why people leave?”

→ (Pay may not be the real issue)

❌ "How could our comp program be better?"

✅ “What comp decision worked well — and what backfired?”

→ (Learn from history. Avoid past mistakes.)

🎯 Bonus question:

“If you could fix one thing about our pay program overnight — what would it be?”
→ (Pins down the most urgent pain point)

Compensation Can’t Be Built in a Vacuum

The best strategies emerge from understanding:

🔹 What’s really broken (hint: it’s not always pay)
🔹 What employees actually value