Question

Describe the concept of total compensation. Do you think it is a trick to present salaried positions this way or good business form? Why or Why not?

Answer 1

The concept of total compensation can also be used to describe the total value an organisation offers employees.

Total Compensation = Base Salary + Incentive Compensation.

For newly-hired employees, the total compensation in the year hired may also include a sign-on bonus. This also includes all the benefits offered by the employer which is vacations, dental insurance, health insurance.

Base salary : is the minimum amount received or the standard salary that an employee receives for getting the job done.

Incentives: is the amount an employee receives and it is not fixed, it depends on the employee performance.

Salary received by employee is $80,000 and incentive is 10% of salary, so total compensation is :

$80,000 + $8,000

= $88,000.

Yes ,presenting the total compensation is a good business form rather than a trick . It can boost employee morale and retention rate. It helps to attract and retain the brightest talent. It also enhances the productivity of the company.

When the total communication includes all the valued benefits provided by the organisation including lap tops, cell phones it could be higher by 25%. When communicated effectively to the employees the compensation becomes very competitive and helps to strenghten the business.