© Creative Compensation Solutions, Inc.
Direct Compensation
Direct Compensation is typically referred to as "cash compensation" and includes:
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Base Salary
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Incentive Pay
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Stock Based Incentives
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Bonuses
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Commissions
These dollars are discretionary income to the comployee/associate. A weel designed
compensation plan will have an appropriate "mix" of these components.
Indirect Compensation
Indirect Compensation includes things that have a monetary value but are provided as a
benefit. This includes:
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Health Insurance
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Life Insurance
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Retirement Plans: Pension and 401 (k)
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Vacations/Holidays
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Child Care Facility/Subsidy
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Group Legal Plans
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Other Benefits and Perquisites
With a plethora of available benefit programs, it is important to provide those programs
which meet the needs of your employees/associates.
Psychic Income
Psychic Income includes the psychological satisfactions that an employee/associate
derives from:
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the type of work he/she performs
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their work environment
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constructive feedback they receive (performance management system)
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recognition
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other factors that may influence an individual´s motivation to perform
While psychic income is the least expensive form of compensation, it is often overlooked
or taken for granted. This compensation component is often measured by conducting
an employee opinion survey.
What is Total Compensation ?
Total Compensation includes:
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Direct Compensation
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Indirect Compensation
•
Psychic Income
In analyzing the total compensation package, CCS creates a value for each component
of direct and indirect compensation. That value is then compared to a competitive
market to determine competitiveness and the appropriateness of the current
compensation "mix." An organization's business strategy will provide direction to
determine the appropriate compensation "mix."