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Staff Compensation Options


24 Minute Human Resources

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Unit Summary

The three major types of compensation are:
  • Direct Financial Compensation
  • Indirect Financial Compensation
  • Non-financial Compensation

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Compensation is the total of all rewards provided to employees in return for their services. The overall purposes of providing compensation are to attract, retain, and motivate employees.
The three major types of compensation are:
  • Direct financial compensation: compensation consists of the pay that an employee receives in the form of wages, salaries, commissions, and bonuses.
  • Indirect financial compensation: consists of all financial rewards that are not included in direct financial compensation, such as health care insurance.
  • Non-financial compensation: consists of the satisfaction that an employee receives from the job itself or from the job environment and the workplace flexibility, like a parking spot next to the CEO’s parking spot.
To determine compensation, each organization must form their own compensation program. A good compensation program will have a balance of salaries, benefits and rewards which will help the organization gain a competitive advantage in today’s labor market, maintain talent and motivate employees.
Remember, “Your number one customers are your people. Look after employees first and then customers last. “Ian Hutchinson, author of People Glue

“Do not hire a man who does your work for money, but him who does it for the love of it.” Henry David Thoreau, Life without Principle