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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:
Total Compensation = Base Salary + Incentive Compensation
Sometimes the term total compensation is also used to describe the total value that an organization has to offer employees. For example, this might include those things that have a monetary value as well as the benefits that a job has to offer. Vacation time, holiday pay, health, dental and life insurance, and tuition reimbursement plans are all benefits that can be considered part of an employee's total compensation. |
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