Family Wages

What to pay family members who contribute to the farm

At the Farm Futures Summit in St. Louis last week, someone in the audience asked me a question about wages paid to family members working on the farm.  She said on her farm, the non-contributing family members thought the contributing or "working-on-the-farm" members were overpaid in wages and that was taking away from shared profits.  She wanted to know how to support or prove the wages paid were appropriate.

This is a broad topic to answer as each farm is unique in how they handle wages, perks such as housing and gas, land rents and profit sharing.  I would start by determining what the market is paying for each role on the farm.  If you didn't have the family member available and had to hire a person externally to fill the position, what would it cost your company to hire and bring that person on board?  To determine that you need to figure out what other companies and industries are paying for similar roles to give you a baseline comparison.

There are several ways you can get benchmark compensation data.  The most accurate way is also the most expensive. These are compensation market surveys taken by large consulting firms.  Well known surveys with a high number of participants include Mercer and TowersWatson.

A better option would be to hire an independent compensation consultant who already has all the surveys and pay them to do the analysis; the cost is between $600 - $1,200 per position.  In these surveys you can look at data cuts by position, by location, specific industry and even by size (financial or employee size).  A compensation consultant would take several surveys and blend them to get the best average for you and then they break it down between 25th percentile, median, and 75th percentile. 

Another option? AgCareers has developed a compensation survey specific for agriculture. It does not have as many participants, but is more specific to our industry.

If you don't want to go that in depth and just want a pulse check - not as accurate - I have tried several other techniques.  I will look on the internet for job openings similar to the farm role and review the wage range if they have it listed on the job.  I know, not exactly rocket science.  I will do that for as many descriptions as I can find and it will give me a pulse check. My old comp consultants would probably cringe hearing that.  

I also ask non-competing companies what range they are paying, but they're not always open about offering that information.  You may want to ask a co-op what they are paying for sprayer operators, managers, etc.  Or ask family or friends who work in construction industries what they are paying for foreman, mechanic, etc.  Again not as accurate, but it doesn't cost anything except your time.

I will pick up the Leadership Series in a few weeks.

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