Question

Describe, discuss, and give specific examples of six types of indirect compensation and the challenges that organizations in the United States are facing.

Answer 1

Indirect Compensation is also knows an non-monetary or non-financial incentives which are provided to the employees to fulfill their other needs except basic needs. It is in addition to cash benefits. The six types of indirect compensation are-

1. Employee Participation
This includes involving the employees for some decisions regarding the company which motivates them and help them to increase their self worth.

2. Employee Recognition
Various programs are used where the company recognizes the efforts by merely appreciating or giving employee of the month title. it also includes providing a job title/position.

3. Perquisites
benefits in kind include health insurance, chauffeur driven car, rent free accommodation , free mobile / internet and much more.

4. Social Security benefits
This includes pension, provident funds or permanent job which fulfills security needs of employees.

5. Employee Empowerment
Providing more autonomy and authority to the employees helps the employees to make their own decsions and make them more accountable.

6. Job Enrichment / Career Development.
Innovation or designing the job in such a way that it is more challenging, interesting and gives more power. Even carrer development programs like education, training, foreign trips are a part of indirect compensation.

Companies in US are facing the fall in demand and sales due to COVID-19 and subsequent lockdown. This has resulted in huge loss of revenues which is forcing the companies to top the dividend, reduction of salaries, retrenchment of employees who do not have work from home. Even the hikes for the year have been stopped, no indirect incentives are paid during this period and even some companies are unable to pay the current salaries. Even the hiring of new employees has decreased and has been kept on hold.