At the broadest level, compensation and benefits, also referred to as total rewards, can be described as an exchange of payment from an employer for the services provided by its employees. The components of total rewards package are as follows:Monetary compensation: Monetary compensation includes any costs the organization incurs for the benefit of employees, such as all forms of cash compensation, 401(k) matching, medical care premiums, pension plans, and paid time off. Other kinds of rewards include benefits that support the organization's culture such as stock options, Employee Stock Ownership Programs (ESOPs), and incentive plans.Nonmonetary compensation: Nonmonetary compensation includes nontraditional work life balance benefits such as telecommuting, on site childcare, and flex time.Direct compensation: Direct compensation includes payments made to employees that are associated with wages and salaries. This includes base pay, variable compensation, and pay for performance.Indirect compensation: Indirect compensation consists of any employee payments not associated with wages and salaries. This includes fringe benefits such as vacation, sick, and holiday pay; insurance premiums paid on behalf of employees; leaves of absence; 401(k) or other pension plans; and government mandated benefits such as Social Security or Family and Medical Leave Act (FMLA) and other benefits.Chapter: Compensation and BenefitsObjective: Total Rewards Defined
At the broadest level, compensation and benefits, also referred to as total rewards, can be described as an exchange of payment from an employer for the services provided by its employees. The components of total rewards package are as follows:
Monetary compensation: Monetary compensation includes any costs the organization incurs for the benefit of employees, such as all forms of cash compensation, 401(k) matching, medical care premiums, pension plans, and paid time off. Other kinds of rewards include benefits that support the organization's culture such as stock options, Employee Stock Ownership Programs (ESOPs), and incentive plans.
Nonmonetary compensation: Nonmonetary compensation includes nontraditional work life balance benefits such as telecommuting, on site childcare, and flex time.
Direct compensation: Direct compensation includes payments made to employees that are associated with wages and salaries. This includes base pay, variable compensation, and pay for performance.
Indirect compensation: Indirect compensation consists of any employee payments not associated with wages and salaries. This includes fringe benefits such as vacation, sick, and holiday pay; insurance premiums paid on behalf of employees; leaves of absence; 401(k) or other pension plans; and government mandated benefits such as Social Security or Family and Medical Leave Act (FMLA) and other benefits.
Chapter: Compensation and Benefits
Objective: Total Rewards Defined