If your farm is like most farms across this country, half of you are flinching as you read this, the other half are going pale. But here, in these next pages, our brave consultants bring the taboo topic into the light
MEET OUR EXPERTS
Brent VanKoughnet was on a parts run during harvest when COUNTRY GUIDE caught up to him. In addition to grain and oilseed farming in Manitoba, VanKoughnet runs Agri Skills Inc., a company specializing in mediation and conflict resolution.
Setting salaries can take all those skills, and more, says VanKoughnet. “Nobody performs at their best if they feel misunderstood and undervalued.”
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On the same day, Kelly Ann McKnight was handling her usual share of farm stress. McKnight runs Stone Ridge Consulting, near Guleph, Ont. She also farms with her husband, Dave Mulligan and three children. While McKnight and Mulligan both work off the farm, they contract feed 1,000 hogs in their finisher barn and grow 100 acres of crops.
“The overall lack of communication is what makes setting salaries a sensitive issue,” says McKnight, an MBA graduate. “It’s something many farmers just don’t want to talk about.”
Meanwhile, to the south, Dick Wittman was helping manage an 18,000-acre dryland farm with cattle and timber operations in Idaho. Wittman a business consultant for other farms, writes articles and conducts workshops. He says one of the most common reasons people hire him as a consultant has to do with compensation concerns.
“It’s unlikely you’ll have a family farm where all involved have the same tenure and skills,” says Wittman.
Then, stir in a generous helping of intergenerational egos, sibling rivalry and the stress of farming, and you’re likely to have a stewing pot of discontent.
It’s a difficult but possible problem to solve, Wittman says. It takes time, and everyone has to accept that it won’t always be easy. Rarely do farm businesses have the sort of established wage scales that other sectors use, where employees are compensated for what they contribute to the business. Instead, the traditional default on the farm is to equalize wages for the same generation, usually at below income tax scales.
Also in the south, Don Jonovic of Family Business Management Services in Ohio has been helping all sorts of businesses solve such problems since 1973. He also agrees it isn’t easy. On mid-to-small farms, for instance, roles overlap extensively so it’s difficult to say who exactly is responsible for what, and to pay them accordingly.
As well, Jonovic adds, much of the compensa-
tion package may actually be in the form of barter, including anything from meat to manure.
“My greatest success has been with gaining agreement on different levels of authority and matching pay bands to those responsibilities,” says Jonovic.
WHY A PLAN IS BEST
As with most decisions on the farm, the job of setting salaries can produce fewer headaches if there is a decision-making structure in place, and if all parties are on-side with the vision of the farm.
We’ve all heard the saying that fair doesn’t mean equal, but what’s more unfair than putting a group of people together to make decisions with no process?
“The greatest pitfall is taking the coward’s way out of this rat’s nest by doing nothing and not having a procedure,” says Jonovic.
Jonovic usually begins by helping the owners accept the need for a compensation procedure, which means they’ll have to be prepared to compromise on their total authority. “This usually requires a guarantee that nobody’s pay will be cut,” Jonovic says. “That’s considered a very bad thing.”
Jonovic then helps create an organizational chart that lists who does what. The chart also outlines reporting relationships, but Jonovic says you have to be careful that you don’t get too objective and scientific in setting up a system. “This just frustrates everyone and is seldom seen as fair,” Jonovic says. “Imposing a new procedure without a lot of discussion and explanations can lead to internecine warfare.”
McKnight says you should make human resources part of the business planning process. “Before you start tackling wages, you should have a business plan, or as I like to call it, a five-year plan,” says McKnight. “Share goals and opportunities, the future direction of your business and the roles of important people.”
If the business plan is discussed with all the key people in the business, they’ll better understand and have input on what’s needed to reach goals. They’ll gain insight into how wages relate to budgets and to the cash flow fluctuations of the business.
McKnight suggests you start by writing down your goals, then what you’re going to need to do to reach those goals. Then you can divide the labour and management duties. Only then you can look at a competitive salary structure.
When you split the workload, you can evaluate how many managers are needed on the farm, says McKnight.
At the same time, you can talk with individuals about their personal needs and goals, and about yours too. For example, it may be a part of your vision for the farm that everyone have lunch together, says McKnight. “That’s valid but it needs to be openly discussed.”
VanKoughnet adds that part of your protocol for setting salaries should be a means of dealing with change. Sometimes, he points out, such change happens when you least want to get sidetracked by it.
If an issue comes up during haying season, for instance, you can point to the plan. You can tell the employee or family member right away about the general format to resolve the situation, and you can pick a specific date in the future tackle it. “Don’t let it slip through the cracks,” says VanKoughnet. “You have a way to deal with this problem, even when you’re busy.”
OUTSIDE EYES CAN HELP
Sometimes it takes outside eyes to see inadequacies and to help find objective solutions. In mainstream business, salaries decisions are generally handled by a company’s board of directors. However, on most farms, the directors and managers are the owners, and they may have too much personal interest and bias to make a good decisions.
We must be careful not to play the family loyalty
card to leverage ourselves or others, says VanKoughnet. “The ultimate check and balance is to be able to look the other person in the eye and each accept their income.”
VanKoughnet says an outside advisory team can go a long way to helping you set up a structure for setting wages. It deflects a sensitive issue to an unbiased party with similar experiences in other businesses.
A couple of years ago, Dick Wittman sat on an advisory board for a big cattle operation in Montana. “The CEO was not paid anywhere near what he was worth because he was the younger brother,” says Wittman. The father was finally stepping down at 87 and had left a mess of wage issues. The oldest brother was in retirement mode but still earning a large salary and the one of the daughters, who was managing a multi-million dollar cattle division, was getting minimum wage.
“They were having no intelligent discussions about this,” says Wittman. “We had to rationalize with logic to help them sort it out.”
HOW MUCH ARE THEY REALLY WORTH?
Once you have an basic outline of each job required by the business, setting salaries may not be as difficult as many farmers think. Wages should be based on demand for labour — don’t forget to include non-taxable benefits.
Part of the problem with salaries on farms is that owner/operators care about the direction and wellbeing of the business, but their first priority is often to avoid paying income taxes. So owners tend to keep their income within the corporation and their wages don’t reflect management input.
“Keep it clean, and take what your time is worth,” suggests VanKoughnet. “You’ll have to pay income tax on it but if it avoids disagreements, it’s better to bite the bullet.”
You might consider the cut-off points for income tax, but you should first look at what the position is worth in the market place. You should be aware of what other companies are paying, even if you can’t pay that much. You may not necessarily be able to pay at that rate but at least you won’t be surprised by a high turnover rate, or you can create a defensive strategy with on-farm bonuses and benefits, says McKnight.
Demand for employees varies on your geography and the season, and it can change over time. For example, in Woodstock, Ont., the guy who was sweeping floors in the local feedmill for minimum wage can now go to Toyota and get paid well over $20 per hour.
card to leverage ourselves or others, says VanKoughnet. “The ultimate check and balance is to be able to look the other person in the eye and each accept their income.”
VanKoughnet says an outside advisory team can go a long way to helping you set up a structure for setting wages. It deflects a sensitive issue to an unbiased party with similar experiences in other businesses.
A couple of years ago, Dick Wittman sat on an advisory board for a big cattle operation in Montana. “The CEO was not paid anywhere near what he was worth because he was the younger brother,” says Wittman. The father was finally stepping down at 87 and had left a mess of wage issues. The oldest brother was in retirement mode but still earning a large salary and the one of the daughters, who was managing a multi-million dollar cattle division, was getting minimum wage.
“They were having no intelligent discussions about this,” says Wittman. “We had to rationalize with logic to help them sort it out.”
HOW MUCH ARE THEY REALLY WORTH?
Once you have an basic outline of each job required by the business, setting salaries may not be as difficult as many farmers think. Wages should be based on demand for labour — don’t forget to include non-taxable benefits.
Part of the problem with salaries on farms is that owner/operators care about the direction and wellbeing of the business, but their first priority is often to avoid paying income taxes. So owners tend to keep their income within the corporation and their wages don’t reflect management input.
“Keep it clean, and take what your time is worth,” suggests VanKoughnet. “You’ll have to pay income tax on it but if it avoids disagreements, it’s better to bite the bullet.”
You might consider the cut-off points for income tax, but you should first look at what the position is worth in the market place. You should be aware of what other companies are paying, even if you can’t pay that much. You may not necessarily be able to pay at that rate but at least you won’t be surprised by a high turnover rate, or you can create a defensive strategy with on-farm bonuses and benefits, says McKnight.
Demand for employees varies on your geography and the season, and it can change over time. For example, in Woodstock, Ont., the guy who was sweeping floors in the local feedmill for minimum wage can now go to Toyota and get paid well over $20 per hour.
“Go online, check out the job listings in your local newspaper, and make a couple of phone calls to HR departments of companies that you are competing with for employees,” says McKnight.
According to hotjobs. a farm manager in the U.S. makes a typical salary of $39,457, ranging from $27,000 to $53,000. You can also review other jobs according to education and experience at
At you can find a range of wages for both hourly and annual income, and with the Salary Calculator, the typical base salary for a farm manager in Canada is C$39,763 to C$39,763.
One of the most useful sites is
farm. htm because it breaks wages into sectors. Unfortunately, the numbers are from the U.S. and in U.S. dollars. They also don’t include benefits, bonuses or incentives, and they don’t show a payroll scale for multi-unit upper management positions.
Other options include talking with experts in the human resource departments of universities and colleges. They often have salary studies and staff with specialized knowledge in salary procedures. You can also hire a consulting firm to rate jobs for pay scale, or engage an outside advisory board to help build a policy and procedure for pay scale.
HOW TO STAGGER A PAY SCALE
On virutally every farm, it turns out, it’s completely realistic to set up a simple salary format that reflects responsibility and that also allows a return on investment for the owners. If the plan is written down it’s easier to explain, and it can also be easier to apply consistently.
Staggered salary levels can allow longer-term incentives so employees can follow a career path. But the objective and the process must be clearly communicated. “Money is the main motivator for only 15 per cent of the population,” says McKnight “But it (salary differences) can be very demotivating for most people if not done properly.”
And don’t kid yourself, people quickly figure out what other employees are being paid.
Salary points should also depend on the nature and size of the business. For example, if you’re the CEO of a ranch grossing $2 million a year, the impact of your decisions is greater than if you were running a small chicken farm, and this should be reflected in how much you’re paid.
However, implementing a change in pay scale can be very stressful. Jonovic has found that the change is better accepted if no one gets a pay cut, but some are rewarded for more responsibility. Those pay hikes don’t have to be huge, just significant enough to be noticeable. In his experience, a pay range of $5,000 clears that bar on many farms.
Wittman warns that sometimes, you can’t avoid the fact that a family member or employee is currently getting paid more than they should be.
“Good ol’ boys don’t want change, and they don’t want there to be winners and losers,” says Wittman. “But the reality is that some people will have an increase in pay and others will have a decrease.”
That doesn’t mean you should be completely cold-hearted about it. “Everyone’s got to bend a little bit to help the transition process,” says Wittman. “Maybe that means making smaller changes over multiple stages or years.”
“Go online, check out the job listings in your local newspaper, and make a couple of phone calls to HR departments of companies that you are competing with for employees,” says McKnight.
According to hotjobs. a farm manager in the U.S. makes a typical salary of $39,457, ranging from $27,000 to $53,000. You can also review other jobs according to education and experience at
At you can find a range of wages for both hourly and annual income, and with the Salary Calculator, the typical base salary for a farm manager in Canada is C$39,763 to C$39,763.
One of the most useful sites is
farm. htm because it breaks wages into sectors. Unfortunately, the numbers are from the U.S. and in U.S. dollars. They also don’t include benefits, bonuses or incentives, and they don’t show a payroll scale for multi-unit upper management positions.
Other options include talking with experts in the human resource departments of universities and colleges. They often have salary studies and staff with specialized knowledge in salary procedures. You can also hire a consulting firm to rate jobs for pay scale, or engage an outside advisory board to help build a policy and procedure for pay scale.
HOW TO STAGGER A PAY SCALE
On virutally every farm, it turns out, it’s completely realistic to set up a simple salary format that reflects responsibility and that also allows a return on investment for the owners. If the plan is written down it’s easier to explain, and it can also be easier to apply consistently.
Staggered salary levels can allow longer-term incentives so employees can follow a career path. But the objective and the process must be clearly communicated. “Money is the main motivator for only 15 per cent of the population,” says McKnight “But it (salary differences) can be very demotivating for most people if not done properly.”
And don’t kid yourself, people quickly figure out what other employees are being paid.
Salary points should also depend on the nature and size of the business. For example, if you’re the CEO of a ranch grossing $2 million a year, the impact of your decisions is greater than if you were running a small chicken farm, and this should be reflected in how much you’re paid.
However, implementing a change in pay scale can be very stressful. Jonovic has found that the change is better accepted if no one gets a pay cut, but some are rewarded for more responsibility. Those pay hikes don’t have to be huge, just significant enough to be noticeable. In his experience, a pay range of $5,000 clears that bar on many farms.
Wittman warns that sometimes, you can’t avoid the fact that a family member or employee is currently getting paid more than they should be.
“Good ol’ boys don’t want change, and they don’t want there to be winners and losers,” says Wittman. “But the reality is that some people will have an increase in pay and others will have a decrease.”
That doesn’t mean you should be completely cold-hearted about it. “Everyone’s got to bend a little bit to help the transition process,” says Wittman. “Maybe that means making smaller changes over multiple stages or years.”
“Go online, check out the job listings in your local newspaper, and make a couple of phone calls to HR departments of companies that you are competing with for employees,” says McKnight.
According to hotjobs. a farm manager in the U.S. makes a typical salary of $39,457, ranging from $27,000 to $53,000. You can also review other jobs according to education and experience at
At you can find a range of wages for both hourly and annual income, and with the Salary Calculator, the typical base salary for a farm manager in Canada is C$39,763 to C$39,763.
One of the most useful sites is
farm. htm because it breaks wages into sectors. Unfortunately, the numbers are from the U.S. and in U.S. dollars. They also don’t include benefits, bonuses or incentives, and they don’t show a payroll scale for multi-unit upper management positions.
Other options include talking with experts in the human resource departments of universities and colleges. They often have salary studies and staff with specialized knowledge in salary procedures. You can also hire a consulting firm to rate jobs for pay scale, or engage an outside advisory board to help build a policy and procedure for pay scale.
HOW TO STAGGER A PAY SCALE
On virutally every farm, it turns out, it’s completely realistic to set up a simple salary format that reflects responsibility and that also allows a return on investment for the owners. If the plan is written down it’s easier to explain, and it can also be easier to apply consistently.
Staggered salary levels can allow longer-term incentives so employees can follow a career path. But the objective and the process must be clearly communicated. “Money is the main motivator for only 15 per cent of the population,” says McKnight “But it (salary differences) can be very demotivating for most people if not done properly.”
And don’t kid yourself, people quickly figure out what other employees are being paid.
Salary points should also depend on the nature and size of the business. For example, if you’re the CEO of a ranch grossing $2 million a year, the impact of your decisions is greater than if you were running a small chicken farm, and this should be reflected in how much you’re paid.
However, implementing a change in pay scale can be very stressful. Jonovic has found that the change is better accepted if no one gets a pay cut, but some are rewarded for more responsibility. Those pay hikes don’t have to be huge, just significant enough to be noticeable. In his experience, a pay range of $5,000 clears that bar on many farms.
Wittman warns that sometimes, you can’t avoid the fact that a family member or employee is currently getting paid more than they should be.
“Good ol’ boys don’t want change, and they don’t want there to be winners and losers,” says Wittman. “But the reality is that some people will have an increase in pay and others will have a decrease.”
That doesn’t mean you should be completely cold-hearted about it. “Everyone’s got to bend a little bit to help the transition process,” says Wittman. “Maybe that means making smaller changes over multiple stages or years.”
