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Definition of Compensation:

Derived from the Latin word Compensare, which means ‘to weigh against’. Essentially, it is the cash and non-monetary benefits you pay to your employees in exchange for their work or services.

Importance of Compensation:

The growth of your business lies in the employees you hire. Compensation is one of the deciding factors for attracting and retaining employees. With a fair compensation, your employees will be happy and remain loyal to you. They are more satisfied with their jobs and would be more productive in the workplace.

All of this, cumulatively, will help your business flourish!

Types of Compensation:

Mainly, there are two types:

We can further divide monetary compensation into: 

Creating a compensation plan for your company: 

Compensation is one of the biggest expenses for your company. It is impossible to run your company without incurring it. Here are a couple of things you need to know before you draft a fair compensation plan: