Compensation Overview and Elements

The fundamental compensation paid to an employee for carrying out their assigned job duties. It's a fixed amount that doesn't vary based on performance or hours worked.

A payment method where employees receive a set amount for each hour worked, regardless of performance or tasks completed.

A fixed payment method where employees receive a set amount for a specific period, often weekly, bi-weekly, semi-monthly, or monthly. Common for roles with greater responsibility and decision-making.

A prohibited practice in many countries where companies or groups agree on prices or wages, stifling competition and harming consumers.

A common practice where organizations use external companies for collecting confidential data on compensation and benefits. This ensures impartiality and protects sensitive information.

A pay system that considers all costs associated with employing a worker, including standard salary plus additional expenses like housing allowances or transportation costs.

A pay adjustment that takes into account inflation, government regulations, and the increasing cost of living.

Payments provided to employees in addition to their regular base pay. Examples include housing allowances, transportation stipends, or meal allowances.

A brief summary of a job, often used in salary surveys, providing a general overview in one or two paragraphs.

A method of setting pay structures using external market data to determine the prevailing rate for a job.

Jobs that are commonly found in multiple organizations and are used as a basis for pay comparisons.

The most widely used document for describing a job, outlining the key responsibilities, duties, and requirements.

The practice of collecting and analyzing data about pay rates, practices, and trends in the external job market.

The general tasks, duties, and responsibilities involved in performing the job.

A structured ranking of jobs within an organization, based on their relative value and complexity.

The level of skill, effort, responsibility, and working conditions associated with the job, determining its position in the organizational hierarchy.

The principle of fairness and consistency in pay rates, ensuring that similar jobs within and outside the organization are compensated accordingly.

A set of characteristics and qualifications that an individual needs to successfully perform the job.

A method for evaluating jobs based on their content and requirements, leading to a structured job hierarchy.

A series of steps or levels within a similar job category, outlining progression paths and increasing responsibilities.

A whole-job approach to job evaluation that ranks jobs from highest to lowest based on their overall value to the organization.

The average pay level in the market for a specific job.

The weight or importance assigned to each factor in a job evaluation model, used to determine overall job value.

A method of job evaluation that assigns jobs to predefined categories based on their characteristics and requirements.

Pay for working in dangerous or risky conditions, providing a compensation premium for undertaking higher risk.

Pay for being accessible and available to work on short notice, even outside regular working hours.

A payment that compensates for the difference in living costs between an employee's home country and their assigned location.

Pay differences for the same job, based on variations in the cost of living or labor costs in different geographical areas.

Pay given to individuals who are fluent in more than one language and use those skills in their work to meet the organization's needs.

Rewards employees for demonstrating specific skills relevant to their jobs, not just their base job title.

An individual is rewarded for reaching specific goals and exceeding performance expectations.

Short-term incentive plans often used for bonuses, incentives, and commissions focused on achieving goals within a year or less.

A type of short-term incentive plan for sales employees, where payments are based on a pre-determined performance and reward schedule, typically making up a significant portion of their total compensation.

Cash payments made to sales employees based on their sales achievements or profit margins on those sales.

A type of compensation plan that rewards employees for completing specific tasks or achieving certain goals, often based on their overall performance or company performance.

A payment offered to a potential employee to encourage them to accept a job offer.

A payment offered to employees for recommending candidates who are subsequently hired, incentivizing them to spread the word about their company's openings.

A type of variable pay plan that focuses on rewarding employees for their ability to persuade customers and generate sales.

The percentage of an employee's compensation that is tied to their performance and is subject to fluctuations based on their achievements.

A compensation program that aligns the mix of compensation (base pay, benefits, variable pay) with the specific skills and responsibilities required for the job.

A payment given to critical employees to encourage them to stay with the company for a specific period or until a certain event, such as a merger or acquisition.

A plan that motivates employees to reach specific goals by offering rewards, typically based on pre-determined performance criteria and reward schedules.

The criteria and objectives for achieving performance targets and the corresponding reward system are decided in advance and communicated to participants.

Incentives are earned again during each new performance period or year, encouraging ongoing effort and achievement.

These plans provide incentives for achieving long-term objectives that extend beyond a single year, typically measured over three to five years.

A type of LTI plan where the award is based on the value of company stock, fostering employee alignment with shareholder interests.

A type of LTI plan where the award is paid in cash, independent of company stock performance, providing a stable form of long-term reward.

Long-term incentives that use company stock or a stock equivalent for payments, often fostering a sense of employee ownership in the organization.