Employee Benefits and Compensation (Employee Pay)

Sections of this topic

    Employee Benefits and Compensation (Employee Pay)

    © Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.
    Adapted from the Field Guide to Leadership and Supervision in Business
    and Field Guide to Leadership and Supervision for Nonprofit Staff.

    Sections of This Topic Include

    Employee Benefits
    Salary Surveys

    Also consider
    Related Library Topics

    Learn More in the Library’s Blogs Related to Benefits and Compensation

    In addition to the articles on this current page, also see the following blogs
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    Library’s Career
    Management Blog

    Library’s Human Resources

    Employee Benefits

    Employee benefits typically refers to retirement plans, health life insurance,
    life insurance, disability insurance, vacation, employee stock ownership plans,
    etc. Benefits are increasingly expensive for businesses to provide to employees,
    so the range and options of benefits are changing rapidly to include, for example,
    flexible benefit plans.

    Benefits are forms of value, other than payment, that are provided to the employee
    in return for their contribution to the organization, that is, for doing their
    job. Some benefits, such as unemployment and worker’s compensation, are federally
    required. (Worker’s compensation is really a worker’s right, rather than a benefit.)

    Prominent examples of benefits are insurance (medical, life, dental, disability,
    unemployment and worker’s compensation), vacation pay, holiday pay, and maternity
    leave, contribution to retirement (pension pay), profit sharing, stock options,
    and bonuses. (Some people would consider profit sharing, stock options and bonuses
    as forms of compensation.)

    You might think of benefits as being tangible or intangible. The benefits listed
    previously are tangible benefits. Intangible benefits are less direct, for example,
    appreciation from a boss, likelihood for promotion, nice office, etc. People
    sometimes talk of fringe benefits, usually referring to tangible benefits, but
    sometimes meaning both kinds of benefits.

    You might also think of benefits as company-paid and employee-paid. While the
    company usually pays for most types of benefits (holiday pay, vacation pay,
    etc.), some benefits, such as medical insurance, are often paid, at least in
    part, by employees because of the high costs of medical insurance.

    Planning an Employee Benefits Program (Various Perspectives)

    Benefits Planning and Outreach
    BenefitsLink (search
    for “plan” in the search window on that page)

    Atypical Employee Benefits

    Buying an Employee Benefits Program

    many resources

    Buying Life Insurance — Small Businesses
    Health Benefits, Retirement Standards, and Workers’ Compensation: Employee Benefit Plans

    General Resources

    Benefits Links We Like, by Topic

    Complete Guide to Human Resources for Small Business
    – The National Employee Benefits Website

    Benefits – Human
    Resources Net Links (search for “benefits” in the search window at
    this site)

    Additional Information About Employee Benefits for Nonprofits

    Can Complete for Employee Benefits

    Employee Compensation

    Compensation includes topics in regard to wage and/or salary programs and structures,
    for example, salary ranges for job descriptions, merit-based programs, bonus-based
    programs, commission-based programs, etc. (Also see the Related Info (including

    Compensation is payment to an employee in return for their contribution to
    the organization, that is, for doing their job. The most common forms of compensation
    are wages, salaries and tips.

    Compensation is usually provided as base pay and/or variable pay. Base pay
    is based on the role in the organization and the market for the expertise required
    to conduct that role. Variable pay is based on the performance of the person
    in that role, for example, for how well that person achieved his or her goals
    for the year. Incentive plans, for example, bonus plans, are a form of variable
    pay. (Some people might consider bonuses as a benefit, rather than a form of
    compensation.) Some programs include a base pay and a variable pay.

    Organizations usually associate compensation/pay ranges with job descriptions
    in the organization. The ranges include the minimum and the maximum amount of
    money that can be earned per year in that role.

    Employees have certain monies withheld from their payroll checks, usually including
    federal income tax, state income tax, FICA (social security) contributions,
    and employee contributions to the costs of certain benefits (often medical insurance
    and retirement).

    Exempt and Non-Exempt

    Jobs in organizations have two classifications, exempt and non-exempt.

    Professional, management and other types of skilled jobs are classified as
    exempt. Exempt jobs get a salary, that is, a fixed amount of money per time
    interval, usually a fixed amount per month. It’s not uncommon for exempt positions
    to receive higher compensation and benefits than non-exempt jobs, although non-exempt
    jobs often can make more money than exempt jobs simply by working more hours.

    Unskilled or entry-level jobs are usually classified as non-exempt. Non-exempt
    jobs usually get a wage, or an amount of money per hour. Non-exempt jobs also
    get paid over-time, that is, extra pay for hours worked over 40 hours a week
    or on certain days of the week or on holidays.

    Each job must have the same pay range for anyone performing that job, that
    is, one person can’t have a higher maximum pay than someone else doing that
    same job.

    General Resources About Compensation

    Outline and Definitions

    7 Hidden Perks Not In Employee Paychecks
    You Be Fired For Asking For a Raise?

    Merit Pay Doesn’t Work

    Also consider

    Salary Surveys

    It is extremely useful to reference salary surveys when determining salaries.
    The surveys lend tremendous credibility and fairness to the process of determining
    compensation. Be sure that surveys are somewhat current. Reference them to find
    the salaries for the job roles that are the closest match to the roles you are
    deciding the compensation for. The closer you can match the role to the type
    of services, locale and job title of the role you are deciding compensation
    for, the more useful the survey is likely to be to you, especially if the survey
    was generated in the past five years or less.

    Sites With Salary Survey Information

    Surfing for Salaries (from monster.com, helps to find salaries
    in wide range of fields)

    Occupational Outlook Handbook
    List of salary
    survey sites

    State Occupational
    Employment and Wage Estimates

    List of salary
    survey sites and articles

    Profession Specific Salary Surveys

    Information Technology Compensation

    2015 IT Skills and Salary Report
    JD Resources

    For the Category of Human Resources:

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