|Book Edition||15th Edition|
|Publisher||Pearson Higher Education|
Compensation may be understood as the salary or wages provided by an organization to the employees in return for the time invested in performing the work. These are generally monetary benefits but may, sometimes, also include non-monetary benefits such as an awarded trip to the best employee.
Compensation is the remuneration or pay provided to the employees in favor of the time given to perform the work. A good compensation helps in the retention as well as recruitment of the employees.
The payment that an employee receives, in favor of the job or duty performed, that is in monetary terms is known as direct financial compensation. This is a part of the total compensation but includes only those benefits that are received in term of money such as wages, salary, bonuses, and so on.
The monetary benefit that an employee may receive either in the form of salary or wages in return for the work performed is defined as direct financial compensation.
Extraneous benefits are part of total compensation that an employee receives not in terms of money but is equivalent to monetary value. The benefits may include indirect monetary benefits such as medical benefits and paid trips. This indirect method of compensating the employees is termed as indirect financial compensation.
The extraneous benefits that an employee may receive in addition to the direct monetary benefits may be defined as indirect financial compensation. This may include compensation that is not given in monetary terms but holds some monetary value.
The intrinsic value and sense of satisfaction that an employee may receive after introspection about the job is termed as non-financial benefit. This compensation can also be received from the benefits related to the job profile such as work environment, awards and recognition, designation, and so on.
Non-financial benefits can be understood as a value that an employee can receive from oneself or from the surroundings. This may include the self-satisfaction that the employees derive from performing their job.