Compensation and benefits is everything a company gives employees in return for their work, in cash or in other forms. Compensation covers salary, allowances and variable pay, benefits cover medical insurance, extra leave and the like, and the C&B function designs and manages both fairly within budget.
Step by step
- 1
Direct compensation
Basic pay, allowances, incentives, commissions, bonuses and annual raises.
- 2
Statutory benefits
What the country's law requires, such as social insurance and leave, and the end-of-service gratuity where the law provides it.
- 3
Voluntary benefits
What the company adds by choice, such as private medical insurance, meals, transport, training and flexible work.
- 4
The C&B toolkit
Job evaluation, the salary scale and grades, market comparison, incentive schemes, benefits policy and payroll.
- 5
Measuring the result
Labor cost as a share of revenue, employee turnover, and the company's ability to attract the right candidates.
A common mistake is comparing salary alone with a competitor's offer. Show employees their full package in writing, because much of the value of benefits goes unseen unless it is set out in front of them.
- compensation and benefits meaning
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