HR: What all Includes Compensation

For employees, the term “work compensation” has a very limited meaning. They generally perceive compensation as the monthly or yearly wages that they get. While this is only partially true, the term “work compensation” is rather broad and includes many other things also. This is the reason when employees complain that they received a salary that is less than what their compensation package says. Wages are just a part of the compensation package.

While discussing the compensation and wages it should be in notice that federal and state agencies frame laws for minimum wages that has to be paid for the employees. HR should keep these laws and the minimum wages in mind while deciding the wages and compensation packages of the individual. Any deliberate and non-deliberate acts of non-compliance can pull the organization into lawsuits and penalties. Labor law posters regarding same has to pasted in the workplace for the information of employees.

All that compensation includes
The reason employees feel that they are underpaid than their compensation is because they generally treat compensation as salary only and calculate likewise but compensation is a mix of all the expenses and privileges along with the salary that a employer bears. Compensation includes base salary and other benefits like medical facilities, bonuses, commissions, on-site amenities, retirement benefits and any other like things which an employer arranges for the employee at work. In short it is the total expenditure that an employer does on its particular employee.

Base salaries and compensation benefits change from company to company. So a high compensation package should not be treated as a high salary. The salary can be less in a high compensation package also as other benefits may be high. Hence, an employee must get these things clear before joining a particular company rather than crying foul afterward.

Importance of compensation programs
A healthy and good compensation package encourages an employee to build goodwill and work hard for the interests of the company. An employee who is properly paid develops job satisfaction and work hard above expectations. Hence developing a proper compensation package for employees is very important. They should include suitable salaries and necessary benefits also which will keep an employee happy and retained with the company. Procedures and instruments should be in place to honor the hard work and commitment of employees through rewards and incentives. Recognition of work and appreciation builds work satisfaction which is more important and worthy than the salaries paid to them. This leads to long term benefits for the company.


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