Compensation and Benefits

Compensation and Benefits

​Compensation

Compensation: Pay for work completed.

Compensation is the financial value that an employee receives in exchange for their services.

This monetary value can include wages, salary, commissions and bonuses.

​Compensation Examples

Wages: Pay for the number of hours worked, amount may vary.

Salary: A set amount of pay you receive each year.

Wage example

Suppose an electrician is hired at the rate of $10 per hour and gets a wage every week. The wage to be paid each week can be calculated by multiplying the total hours worked in a week by the pay rate. Suppose he works 40 hours a week, then the total wage he should receive during the pay period (each week) will be- 40 x $10 = $400

Salary Example

Suppose an administrative manager has been hired at a salary of $240,000 per year. Now, the company processes an employee’s payroll on a monthly basis. The salary they get each month can be calculated by dividing the total salary by the number of months in a year - $240,000 / 12 = $20,000

Employment Classification

Typically, wages or hourly pay is for part time employees, while a salary is pay for a full time employee.

Part Time: 20 or less hours a week

Full Time: 40 hours a week

Other types of employee classification that dictates wage vs salary pay include:

Temporary/Seasonal
Contract
Independent contractor
On-call

Employment Classification

​Volunteer
Exempt
Nonexempt

Multiple Choice

A set amount of pay you receive each year.

• Wages

• Benefits

• Salary

• Part Time

Multiple Choice

What type of job classification works 20 or less hours a week.

• Salary

• Full Time

• Part Time

• Seasonal

Multiple Choice

The _________ earned each month can be calculated by dividing the total by the number of months in a year - $240,000 / 12 = $20,000

• salary

• wages

• part time

• hours

benefits

Benefits: Additional perks or rewards that a company provides to an employee.

Certain benefits may have a financial value, even though an employee receives no cash.

benefits

Benefits an employee receives can be classified as monetary or nonmonetary.

Monetary: Involves money.

Nonmonetary: Does not involve money.

benefits - mONETARY VALUE

Stock Options - Shares of the company's stock, giving employees the opportunity to own a piece of the company.

Health Insurance - Plans to cover the cost of medical expenses related to health, vision, dental, etc.

Retirement Savings Plans - Helping employees save for retirement, such as a 401(k) plan.

benefits - NONmONETARY VALUE

Flexible Schedule - Flexible work hours and the option to work remotely from home.

Wellness programs: Initiatives like fitness challenges, mental health resources, or on-site wellness activities. 

Training and Development - Training programs to enable employees to learn specific skills or gain knowledge.

HR AND BENEFITS

HR managers help their companies develop benefits plans by analyzing how much each benefit costs and what the company can

reasonably afford.

For example, not all companies that offer health insurance can include vision and dental coverage in those plans.

HR AND BENEFITS

The availability of benefits may also vary based on an employee’s part-time or full-time status.

A part-time employee may qualify for health insurance, for instance, but may have to pay a greater percentage into the plan than a full-time employee.

HR managers are responsible for determining eligibility and costs.

Multiple Choice

All of the following are examples of monetary benefits EXCEPT

• stock options

• health insurance

• retirement plans

• wellness program

Multiple Choice

Every employee has the same benefits available to them regardless if they are part-time or full-time status.

• True

• False

Why are compensation and benefits important

Attracting high-performance candidates - A desirable mix of monetary and nonmonetary options can make an organization more competitive in the marketplace, attract talent and reduce recruitment costs.

Why are compensation and benefits important

Motivated team members - When compensation is below the average in an industry, employers may find it challenging to keep employees highly motivated. Fair compensation boosts morale and increases workplace satisfaction, which motivates people to deliver their best efforts.

Why are compensation and benefits important

Increased loyalty and engagement - When an organization offers employees benefits that make them feel valued and understood in the workplace, it helps improve staff retention and increases loyalty and engagement.

Poll

Which compensation and benefits package would you choose?

• Company A

• Company B