Some of the benefits that are most commonly provided within a total compensation package include:. When a company provides any benefits in addition to the base salary, it may generate annual total compensation statements that outline the total amount paid to employees.
An employee often knows what they are paid as the base salary, but may not know the dollar value of the additional benefits received. Providing this type of statement can help an employee understand what they receive in total compensation.
Some companies use total compensation statements as retention tools to help employees understand their value and feel appreciated. An employee who may be looking elsewhere for employment might base their salary comparisons on base salary only, without realizing how many additional benefits they are receiving and the value of those benefits.
When comparing positions, it is important to compare the total compensation package rather than just the base salary. Related: Salary vs. Hourly Pay: What are the Differences? An employee's salary typically includes only the money they are paid for the work they do in a position.
This is usually expressed as an annual amount, rather than an hourly rate, and does not reflect any taxes that must be withheld or any other withholdings. Total compensation differs in that it includes any benefits paid for, either in full or partially, by the employer. It also includes any nontaxable items given to employees, such as certain types of insurance coverage, tuition assistance and most funds provided for employees to use toward commuting costs.
The items included in total compensation are often referred to as non-cash benefits, although some may be paid in cash. For example, an annual bonus or a commission would be included in your total compensation but may not be reflected in your base salary.
Any funds paid by your employer toward a retirement plan or life insurance policy would also be included in your total compensation. Many of the benefits are not paid in cash, including insurance, paid time off and any fringe benefits. To determine your total compensation, you can follow a series of steps to figure out exactly what your employer provides to you in exchange for the work you perform:.
The first step in figuring out your total compensation is knowing your base salary. You can determine this by reviewing your pay stub, as it will show how much you earn. If the total annual salary is not included on your pay stub, simply calculate the gross amount by the number of pay periods and you will have your gross base salary figure. Most employers provide time-off benefits to their employees. To calculate your total compensation, you will need to assess the value of the paid time off you receive in a year.
Multiply the number of days off you have, across all paid time off buckets, by the amount of money you are paid for a day of work to get that total. The University of Guelph provides a comprehensive total compensation package including salary, group benefits, pension and other programs and services, designed to attract, retain, reward, and motivate employees' commitment and performance.
This package is competitive with other educational institutions and recognizes the diversity and needs of the various employee groups. The University of Guelph's total compensation program supports employees' security, protects employees against financial hardship due to illness, and supports employees in retirement. The total compensation approach is built on the foundation of partnership and shared accountability between the University and its employees.
Toggle navigation. Slideshow Banners slideshow playing Pause slideshow Play slideshow. Previous item. You should also have a corresponding policy for the initial placement of employees, and how and why they would move through the range.
Bonuses can also be used as incentives for individual performance or to motivate the staff to work together to achieve the overall goals of the business. Although bonus systems have traditionally been used mostly for managerial employees, it is now common to see this type of compensation at all levels within an organization. If you use a bonus program, ensure that the rules are fair and the bonuses are considered competitive within the industry.
Benefits include compensation other than pay for work performed that are provided to employees and funded in whole or in part by the employer e. With the mix of generations within the workforce today, from baby boomers to millennials, companies of all sizes must be more creative than ever with their benefit plans to ensure they appeal to a wide employee demographic.
As an employer, you are required to provide certain benefits by law e. You need to evaluate the established benefit norms for your industry, as well as other competitive industries, before selecting among various benefit plans.
As benefits and plans can be expensive to offer and administer, consider using a good broker or benefits consultant to ensure you are getting the service and coverage that is most appropriate to the size and scope of your business. Additionally, benefits consultants can help to educate your employees about your benefit plan e. Finding the right mix to include in your total compensation package is complicated and should focus on what is important to your employees.
Consider what will motivate them not only to stay with you, but to perform in a way that helps your business to succeed.
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