Many employers see benefits as a necessary cost of hiring employees, but not something that needs much attention. However, benefits and employee compensation can have a significant impact on the success of your business. The right benefits package can attract exceptional talent, help you retain employees, and boost employee retention—all while staying within your budget.
There are many factors to consider when establishing an employee benefits program. Employee compensation is one component of benefits — but it is a complex one. There are multiple types of employee compensation, each with its own pros and cons regarding cost, tax implications (therefore you need a pay stub generator to prevent issues with employee paycheck), and other factors.
In this article, we’ll take an in-depth look at employee compensation and its various types so that you can make informed decisions when setting up your employee benefits program.
Employee Compensation and Its Types
- salary Cash, cheques, direct transfer, and payroll cards are just a few of the payment methods available to employers. Each payment option has advantages and disadvantages of its own, making it challenging to decide which to employ.
- hourly wages Employers pay employees for each hour the hourly workers put in work. At least, the federal minimum wage is required for hourly wages. It also entitled hourly employees to overtime pay at one and a half. Their regular rate for time worked above 40 hours in a workweek, unless their employment qualifies for an exemption.
- Sales Commission Tips Bonuses for Stock Options- Companies give stock options or restricted shares to their employees as compensation. The shares vest gradually over several years, deferring employee entitlement to them until after the expiration of a predetermined amount of time. The company will give up the shares if the employee leaves the company before they have vested.
- Incentive Benefits and Other Variable Pay (healthcare, paid leave, etc.) These include appreciation and prizes, referral-based initiatives, profit sharing, professional growth, wellness and good health, compensation for tuition, bonuses and pay increases, and amusing gifts. All these, especially healthcare, will give employees the enthusiasm and drive to be effective at the workplace.
- Non-monetary reward (recognition, meals, etc.)- Employees are emotional and feel more appreciated and engaged when given non-monetary incentives. Non-monetary reward includes: At-work flexibility, to reward and appreciate employees, give a second day off, allocate time for volunteering, detailed training schedules, lunch with the employer, rewards from experience, to give a worker a mentoring offer, to increase employee autonomy at work, to give employee chances to take on leadership roles and offer wellness options to employees.
In addition, these will serve as an ultimate guide to establishing your employee benefits and compensation:
