Insight Performance

HR. Solved.

MINIMIZE RISK. REDUCE COSTS. INCREASE PROFITABILITY. That’s HR.Solved.SM
  • Home
  • About
    • Meet our Expert Team of HR & Benefits Specialists
    • Why Choose Insight for Your HR & Benefits Solutions
    • In The News
      • Awards
      • Press Releases
    • Career Opportunities
  • HR Services
    • HR. Solved.SM Subscription Service
    • Managed HR Consulting
    • HR & Employee Benefits Projects
      • Compliance
      • Compensation & Rewards Strategies
      • Employee Relations
      • Talent Management
      • Recruiting
  • Benefits Services
    • Employee Benefits
      • Benefits
      • Benchmarking
      • HRA/HSA/FSA Comparison
      • Open Enrollment Communication and Education
      • Wellness Programs
    • Group Products
      • Health
      • Dental and Vision
      • Life and AD&D
      • Disability
      • Voluntary Worksite Benefits
    • Executive Benefits
      • Supplemental Disability
      • Key Person Insurance
      • Buy/Sell Agreements
    • Health & Welfare Compliance
      • HIPAA Compliance
      • ERISA Compliance
      • Affordable Care Act
      • Required Employee Notices
      • 2017 HR & Benefits Compliance Checklist
  • Integrated Solutions
    • Engage Insight Performance
  • Resources
    • Blog
    • Podcasts
    • Events
      • Conference Series
      • Conference Series Videos
      • 2019 Webinar Schedule
      • Archived Webinars
        • 2018 Webinar Recordings
        • Human Resources Webinar Schedule – 2017
    • Infographics
  • Contact
  • Client Login

Different Types of Employee Compensation

June 9, 2017

When most people hear the word “compensation,” they automatically think of a paycheck. While money is certainly part of the compensation equation, most people’s total compensation is comprised of a number of different elements, some of which aren’t necessarily tangible.

According to the BLS, in 2016, wages and salaries accounted for 68.4% of employees’ compensation, while benefits made up the remaining 31.6%. In other words, benefits often comprise a far greater portion of pay than most people realize.

As an employer, it’s important to know exactly what’s going into your employees’ total compensation packages so you can explain their aggregate benefits, should you ever be asked. Arming yourself with this knowledge can also help answer questions about compensation and market competitiveness.

Here’s a look at some common — and commonly overlooked — forms of employee compensation:

Base Pay & Overtime Pay

These two are obvious, but they certainly deserve their spot on this list. Base pay is often a person’s reason for getting up and going to work every day. They rely on that paycheck to pay for basic living expenses. Overtime often factors into monetary compensation as well, particularly in certain industries. Warehouse workers, for example, boost their highest national average earnings from $17.62 to $26.48 when overtime comes into the picture, according to Payscale.com.

Commissions

Most often found in sales positions, commissions can make up the majority of some employees’ salaries. Naturally, depending on the industry, commission percentages can vary quite widely. Even within the same industry, commissions can have an enormous differential depending on the region.

Realtors are a great example of commission-driven professionals which vary by region. The national average has lingered right around 5% for the last several years, but if the agent is in a high-sales region such as Denver, 5% can mean ample amounts of cash. Conversely, quiet towns in the Midwest, which don’t see much turnover, may not deliver much in terms of total commission dollars.

Commission percentages may also vary based on the industry, the employee’s experience level or the goals of the company.  For example, many entry-level sales employees have a lower commission percentage which grows as they advance.  Early in their career, they may draw more salary from their base pay, but this ratio changes with experience.

In short, commissions are often the most variable of all the employee compensation types.

Bonuses & Merit Pay

Employees who do a great job throughout the year amy be compensated for their efforts. Annual reviews tend to come with the anticipation of an increase in pay as well. Currently, the national average merit increase is around 3%, but it’s important to be mindful of your employees’ performances so you can adjust this number accordingly. Being frugal with your best people will lead them to your competitors’ doors.

Setting up a bonus program which outlines goals for the employee will drive them to help work on the priorities you’ve set for them.  Similar to commissions, bonus program vary greatly among industry and experience level.  It’s important to make sure that the parameters around your bonus program is outlined and communicated at the beginning of each plan year.

Stock

Stock options are a great way to compensation employees and encourage employees to do work towards the company’s goals, since they’re actually shareholders in the business.  The more successful the company, the greater the value of the options.

Travel/Meal/Housing Allowances

Traveling for work can offer benefits that employees don’t often think of.. Allowing employees to personally bank their hotel points and airline miles definitely has its perks. People who travel for work often, such as sales people and auditors, can end up adding a lot towards their compensation.

Are you doing all you can to make the most of your employee compensation package? Reach out to our benefits and HR professionals at Insight Performance, and let us get to work for you!

Print Friendly, PDF & Email
Share

Insight Performance Engage Center

Insight’s Educational Conference Series

Interested in attending Insight’s Educational Conference Series?

Tags

401k Plans candidate career development compensated breaks Compensation Compliance cost efficient Employee Benefits employee communication employee feedback employee handbook employee incentive plan employee morale employee orientation Employee Policies Employee Practices employee productivity employee recognition employee retention employee rewards employee wellness employ rewards & recognition goal setting HR Consulting HR metrics HR Policies HR Strategy interviewing manager training maternity leave new hire orientation nursing mothers Performance Management policies & procedures recruiting Retirement Plans seminar sexual harassment sick leave Social Media State Minimum Wage teambuilding training & development work life balance workplace safety

Insight Performance

150 Royall Street, Suite 207
Canton, MA 02021

152 Conant Street, 2nd Floor
Beverly, MA 01915

HR Solved

Monthly HR Subscription Service ensuring compliance and building exceptional workplaces.

HR Solved

Business and Human Resources 2017 Outlook Survey

Business and Human Resources 2017 Outlook Survey

Insight’s Educational Conference Series

Interested in attending Insight’s Educational Conference Series?

Our Most Recent Posts

August 2019 Newsletter | MA Paid Leave: Private Exemptions are a Real Option

August Client Alert | New York State Updates to Harassment and Discrimination Law

Top 10 Tips for a Great Internship

Search This Website

Find Us On

Visit Us On TwitterVisit Us On FacebookVisit Us On Linkedin

Sign Up for Our Newsletter

Copyright © 2021 · Insight Performance · Privacy Policy