Compensation is a package of salaries and wages, pay incentives and benefits that an employee receives as a remuneration for rendering services to the organization. Depending upon the nature and mode of compensation, it can be categorized into two dimensions as follows:
1. Financial Benefits
The financial benefits consist such payments which are paid in terms of monetary gains. They enhance the economic well-being of the employees. Financial payments can either be direct or indirect.
Direct Payments
Direct payments consist of wages, salaries, bonuses, commissions,and other direct forms of payments.
Indirect Payments
Indirect payments consist of insurance, social benefits, allowances,employee services, holidays etc.
2. Non Financial Benefits
The non-financial benefits include everything in a work environment which are not expressed in monetary units. They help to enhance a worker's sense of self-respect and sense of being accomplished. The ideas under it are shown as:
Work Benefits
Work benefits consist of challenging job, responsibility, accountability, feeling of achievement and so forth.
Environment Benefits
Environment benefits consist of appropriate policy, adequate supervision, co-worker's status, interesting job, appropriate timing, and the like.