The basic components of employee compensation and benefits employee compensation and benefits are divided into four basic categories: 1 guaranteed pay – a fixed monetary reward paid by an employer to an employee the most common form of guaranteed pay is base salary. Five basic components of a compensation system as a reflection of leadership’s strategy about how it values its employees, a well-established compensation system allows employers to optimize on employee engagement, productivity, financial resources, and organizational goals.
The components of a compensation system include decide the extent to which employee benefits should replace or supplement cash compensation conduct a job analysis of all positions obtain top executives' approval of the basic salary program. Compensation has become a far more complicated issue than just deciding how much to pay your employees in addition to salary, employers must consider many other components — 401(k) plans, stock options, bonuses, and vacation — these too have become part of current compensation packages.
If we take a look at the components of a compensation system, we find that employers decide on what is the right compensation after taking into account the following points the job description of the employee that specifies how much should be paid and the parts of the compensation package.
Employers of choice provide a comprehensive employee benefits package to attract and retain employees in addition to a competitive salary, an employee benefits package is a standard – and expected - part of an employee total compensation package smaller employers tend to offer fewer components in the employee benefits package – and sometimes, no benefits at all. In this article (part ii), we shall look at some components of compensation like basic and variable pay (including the sub-components of variable pay) and discuss how these are fixed by the firms when they sign off on the compensation packages to their employees.
The basic components of employee compensation and benefits 1 the basic components of employee compensation and benefits employee compensation and benefits are divided into four basic categories: 1 guaranteed pay – a fixed monetary (cash) reward paid by an employer to an employee. Exploring all these components of an employee compensation strategy will help you to create the foundation for your startup’s compensation decisions summary: a competitive employee compensation strategy includes a mix of salary, benefits, incentives & non-cash compensation, with benefits having a critical value as they are often a key. In the previous article (part i) we looked at some of the components of compensation that are paid out to employees and the way in which these components are fixed by hr managers and companies in this article (part ii), we shall look at some components of compensation like basic and variable pay.