What is compensation and what are its two types?

What is compensation and its type?

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 compensation and types of compensation?

Bonuses, Profit Sharing, Merit Pay. Stock Options. Travel/Meal/Housing Allowance. Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes…

What do you mean by compensation?

Typically, compensation refers to monetary payment given to an individual in exchange for their services. In the workplace, compensation is what is earned by employees. It includes salary or wages in addition to commission and any incentives or perks that come with the given employee’s position.

What is the types of compensation?

There are six basic forms of compensation: salary, short-term incentives (STIs or bonuses), long-term incentive plans (LTIPs), benefits, paid expenses, and insurance. Short-term incentives are usually formula-driven, whereas bonuses are awarded after-the-fact and are usually discretionary.

What is compensation in HRM?

Compensation refers to the remuneration that an employee receives in return for his/her services to the organization. Compensation management is an integral part of human resource management and helps in motivating the employees and improving organizational effectiveness.

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What is direct and indirect compensation?

Direct compensation involves monetary payments to employees for time worked or results obtained. Indirect compensation involves expenditures made by an employer on behalf of all employees and is typically referred to as “fringe benefits.” Intangible compensation involves non-monetary rewards such as….

What are three different forms of compensation?

Here are the three most popular types of compensation packages and a few notes on who might be most attracted to them.

  • Straight salary compensation. …
  • Salary plus commission compensation. …
  • Straight hourly compensation.

What are the four basic types of compensation?

The Four Major Types of Direct Compensation: Hourly, Salary, Commission, Bonuses. When asking about compensation, most people want to know about direct compensation, particularly base pay and variable pay.