What Are Compensation and Benefits? Examples, Types, and Importance

Compensation and benefits play a vital role in the success of businesses and organizations. They also come in many forms to suit various organizational goals and business objectives. 

Learn more about them and how compensation consulting can help you design a total rewards package that consists of the best compensation and benefits that fit your organization!

Types of Compensation & Examples

Compensation refers to the total amount of money and benefits an employee receives for the work they do. It helps employers attract and retain top talent, motivate employees to work harder and achieve specific goals.

Moreover, it helps ensure fair and equitable pay, promotes employee well-being and helps employers to comply with laws and regulations related to compensation. 

Base Salary

Base salary is a fixed amount of money an employee is paid for their work. It is usually paid on a regular schedule, and is often the primary form of compensation for an employee. 

Bonuses

Bonuses are a form of financial compensation that is paid in addition to an employee's base salary or wages. These are typically awarded to employees for meeting or exceeding certain performance goals, such as reaching sales targets, completing a project on time, or achieving certain objectives.

Types of Benefits & Examples

Benefits are non-wage forms of compensation that an employer provides to their employees in addition to their base salary or wages.  Benefits are important because they provide employees with additional financial support and help to promote their overall well-being.

Benefits such as health insurance, retirement plans, and paid time off can help employees to maintain good health and to balance their work and personal lives. They can also help to attract and retain high-quality employees, and they help employers to comply with laws and regulations related to compensation. 

Health Insurance

Health insurance is a type of insurance that covers medical and surgical expenses incurred by the insured. It helps to cover the cost of health care services and can include coverage for things like doctor visits, hospital stays, prescription drugs, and preventative care. Examples include coverage for medical, dental, and vision care, as well as prescription drugs.

Retirement Plans

A retirement plan benefit is a type of benefit offered by employers to help employees save for retirement. Examples include 401(k) plans, pension plans, and profit-sharing plans.

Paid Time Off

Paid time off (PTO) is a benefit offered by employers that allow employees to take time off work while still receiving their salary or wages. Examples of PTO are vacation days, sick days, personal days, etc.

Life and Disability Insurance

Life insurance is a type of insurance that pays out a death benefit to the beneficiaries of the insured person when the insured person dies. Life insurance can come in the forms of term life insurance, whole life insurance, and universal life insurance.

Meanwhile, disability insurance is a type of insurance that provides financial protection to individuals who are unable to work due to a disability. It can come in the forms of short-term disability insurance, long-term disability insurance, group disability insurance, and individual disability insurance.

Profit-sharing

Profit-sharing is a type of benefit that employers may offer to their employees, where a percentage of the company's profits are distributed among the employees.

Stock Options

Stock options are a type of benefit that employers may offer to their employees as part of their compensation package that gives the employees the right to purchase a certain number of shares of company stock at a specified price.

Wellness Programs

Wellness programs are a type of benefit that employers may offer to their employees aimed to promote physical and mental health. These programs can include things like health screenings, fitness classes, weight management programs, and stress management workshops.

Employee Assistance Programs

Employee Assistance Programs (EAPs) are a type of benefit that employers may offer to their employees, designed to provide counseling and other services to help employees deal with personal and work-related problems. These programs can include confidential counseling services for issues such as mental health, substance abuse, financial problems, and legal issues. 

Count on FutureSense Experts For Compensation and Benefits

Compensation and benefits are crucial to attracting and retaining high-quality employees, incentivizing hard work and good performance, as well as achieving key business objectives. With FutureSense, you can come up with a compensation and benefits strategy that allows you to meet your priorities while also preparing for future goals.

Let FutureSense help future proof your business with our people solutions. Reach out to FutureSense today and get a free quote!