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Component of compensation
The component of compensation in a compensation system can either be monetary or non-monetary benefits.
What are the monetary benefits? and non-monetary benefits?
Explain with relevant examples.
Overview
Monetary compensation is the money granted to an individual by their employer in exchange for providing services to the employer. This exists in the employment sector between an employer and an employee, where the former compensates the latter with money. However, some exceptions exist where an employer may choose to gift an employee at will since that is not compensation for labor. Monetary compensation plays a vital role for employees and companies since it can improve the company's performance, create job satisfaction amongst employees, and attract professionals when there are good compensation packages.
Compensation is classified into monetary and non-monetary compensation means. Monetary compensation is categorized into wages, overtime wages, salaries, commission, piece work rate, bonus, stock options, profits gains, and tips. Out of the various types of monetary compensation, salary is the only type that is not based on a variable unit. This is because it is paid as a fixed amount where the employee is not paid less or more. This makes it the most predictable and stable form of compensation because it does not vary but is fixed over a fixed period. Tips are also unique from the other types because they are not paid by the employer to the employee but by the employer's customer. Non-monetary compensation refers to the benefits that employees receive from employers but are not in the form of money. They include health insurance, pension plans, training programs, and retirement plans. https://study.com/learn/lesson/monetary-compensation-overview-function.html
