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By California Institute for Rural Studies (CIRS) and National Center for Appropriate Technology (NCAT)

Published: 2010

Updated: 2010



20 pages


Using Bonuses, Profit Sharing and Employee Ownership to Motivate and Retain Workers on Your Farm

With input costs and market prices continuing to add pressure to farming operations, the ability to maintain satisfied, engaged, and skilled employees who are familiar with the farming operation is becoming increasingly important. Of the different strategies growers can employ to increase employee satisfaction and retention, variable pay systems such as profit sharing, bonuses, and employee ownership appear to be some of the most important.

This handbook provides an overview of variable pay strategies used on California farms, including formal and informal bonuses, profit sharing plans, and employee ownership plans. These strategies are highlighted in case-study examples. Also included are some practical considerations to keep in mind when implementing a variable pay system, ideas for engaging employees with bonuses, examples of non-monetary rewards, formulas for calculating bonuses, and resources for more information about compensating and managing farm employees.

Table of Contents

Benefits of Variable Pay Systems
Challenges to Implementing Effective Variable Pay Systems
Variable Pay in Farming Operations
Types of Variable Pay on California Farms
Formal Bonuses
Informal Bonuses
Employee Recognition: Gifts & Rewards
Profit Sharing
Employee Stock Ownership Plan (ESOP)
Practical Considerations for All Variable Pay Systems
Appendix I: Point-System Bonus Formula
Appendix II: Bonus with Multipliers Formula

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This page was last updated on: May 7, 2019