The complete compensation of an employee includes both direct and indirect compensation. While the Direct compensation is the monetary compensation given to the employee based on performance and experience, indirect compensation are the rewards and additional perks like insurance, retirement fund and employee discounts on the top of the base salary.
It is the monetary compensation companies provide to employees for their hard work.
Companies cover the cost of travel and commute of various employees. Travel allowances come under that category.
It is provided by company if the employee is relocating for work. It is also part of the Flexi benefit plan wherein a company covers the house allowance, it can be part of the net salary.
Employees are provided with medical allowance that covers them and their family as well.
One can decide the direct compensation for an employee based on –
Recruiters can research how much salary is being offered for similar position in relevant industries. While doing the study, try considering the geographic location as well. If it is a remote role, scanning the entire global market would be a good idea to offer a comprehensive compensation package.
An employee with a higher level of education, skills and experience should be compensated accordingly.
Before offering a position to a candidate please determine a budget and check your resources. This helps recruiters and management take a planned decision.
The monetary benefits aka the in-hand salary that an employee receives for their work in the company is an example of direct compensation.
Direct compensations are a way to appreciate employees and acknowledge their hard work.
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