Compensation is the total cash and non-cash payments that you give to an employee in exchange for the work they do for your business. It is typically one of the biggest expenses for businesses with employees. Compensation is more than an employee’s regular paid wages.

What are the different types of compensation philosophies?

Generally speaking, there are four basic compensation philosophies: market pay, equal pay, flexible pay or tailored pay. Each approach has its pros and cons. With a philosophy of market pay, compensation is determined by breaking down jobs into various elements that are graded in terms of value.

What is a compensation framework?

What are compensation structures? Compensation structures are the pay-based frameworks companies use to establish fair and equitable pay for all employees in the organization. A compensation structure gives a business clear guidelines for assigning initial pay rates, managing raises and distributing bonuses.