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Total Compensation is the term used to describe all monetary compensation paid to employees, including base salary and incentive compensation. For newly-hired employees, the total compensation in the year hired may also include a sign on bonus. Using this strict interpretation of total compensation, the calculation is as follows:
Total Compensation = Base Salary + Incentive Compensation
The term total compensation can also be used to describe the total value an organization offers employees. For example, this might include job perks that have a monetary value, as well as the benefits provided by the employer. Vacation time, holiday pay, health insurance, dental plans, life insurance, and tuition reimbursement plans are all benefits, which can be considered part of an employee's total compensation package. |
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