What is a compensation package and benefits?

What is a compensation package and benefits?

Compensation packages refer to the combination of the salary and various benefits an employer offers you in exchange for employment. Compensation packages tend to vary by employer. Therefore, though they include a basic salary, the fringe benefits they include often depend on the company and the specific position.

What should a compensation package include?

What should be included in a total compensation statement?

• Salary/hourly rate.
• Medical benefits coverage—include amount paid by employee and employer.
• Flexible spending account information.
• Paid leave—include vacation/sick/PTO, holiday, personal, bereavement, military pay, jury duty, etc.
• Disability insurance.
• Life insurance.
• Employee assistance program.

How do I create a compensation and benefit package?

How to Create a Compensation Plan:

1. Start from scratch.
2. Create a job description for each position.
3. Determine the appropriate amount of compensation.
4. Factor in overtime.
5. Identify the benefits and incentives that you will provide.
6. Detail your decisions in a document.

What are the 7 types of organizational compensation?

Types of compensation include:

• Base pay (hourly or salary wages)
• Sales commission.
• Overtime wages.
• Tip income.
• Bonus pay.
• Recognition or merit pay.
• Benefits (insurances, standard vacation policy, retirement)
• Stock options.

What is the difference between compensation and reward?

Compensation would include rewards when you offer monetary payment such as incentives, various bonuses and performance bonus. Organisations reward their staff when they attain the goals or targets that they have jointly set with the employees. Rewards can be non-monetary such as a paid vacation for two.

What is compensation and its types?

Compensation refers to as a wide range of financial and non-financial rewards given to employees for their services rendered to the organization. It is paid in the form of wages, salaries and employee benefits such as paid vacation, insurance, maternity leave, free traveling facility, retirement benefits, etc.

What is an example of direct compensation?

Direct compensation is the money directly paid to employees in exchange for their labor. Direct compensation includes wages, salaries, bonuses, tips and commissions. For example, she may offer performance pay for each employee that meets his or her quarterly performance goals.

What are the components of direct compensation?

Some of the key components of direct compensation are discussed below.

• Salary and wage.
• Car allowance.
• Housing allowance.
• Medical reimbursement.
• Leave travel allowance.
• Special/Other allowance.

What is fixed pay?

Fixed pay is the fixed amount of salary that an employee gets at the end of the month whereas Variable pay is the incentive paid to the employee, monetary or non-monetary, based on their performance for the month. The ratio of fixed to the variable component, as a norm, varies based on the role the employee plays.

What are the types of compensation plans?

Here are some of the most commonly implemented types of sales commission plans used today:

• Straight Salary/No Commission.
• Salary Plus Commission.
• Commission Only.
• Draw Against Commission.
• Profit Margin.
• Territory Volume.
• Capped Commission.
• Performance Gate.

What is compensation plan?

Compensation is defined as the money received by employees from the organization on account of the performance they render. When the employee receives the money in terms of salary or wage, it is known as direct compensation.

What is a compensation structure?

Also known as a “wage structure” or “salary structure,” a compensation structure is the strategy you use to determine how each employee in your company is paid. It considers information like the length of employment, industry minimums and maximums, and merit.

How do you create a compensation structure?

Ten Steps For Building A Salary Structure

1. Establish your compensation philosophy. Each employer needs a policy which outlines their desired market position.
2. Gather market data.
3. Identify benchmark jobs.
4. Measure your market position.
5. Calculate the compa-ratio.
6. Check your budget.
7. Start allocating.
8. Final adjustments.

What are the goals of compensation plan?

A compensation package can include salary, bonuses, health-care plans, and a variety of other types of compensation. The goals of compensation are to attract people to work for your organization and to retain people who are already working in the organization.

What is fixed salary and gross salary?

Gross Salary is the amount of salary after adding all benefits and allowances but before deducting any tax. For Example: An employee has a gross salary of Rs. 50, 000 and basic salary of Rs. 20, 000, then he/she will get a Rs. 20,000 as a fixed salary.

What is the basic pay?

Base pay is the initial salary paid to an employee, not including any benefits, bonuses, or raises. It is the rate of compensation an employee receives in exchange for services. An employee’s base pay can be expressed as an hourly rate, or as a weekly, monthly, or annual salary.

Is base salary and gross salary the same?

The base rate is the minimum amount of earnings that the employee is to receive. The employee may earn additional money by working overtime or by earning incentive bonuses. Gross pay represents wages received. It includes the employee’s base pay and additional earnings and income.

Is base salary and basic salary same?

Base salary is a fixed amount of money paid to an employee by an employer in return for work performed. Base salary does not include benefits, bonuses or any other potential compensation from an employer. The basic salary is the minimum amount of pay an employee receives aloted for a particular position..