Introduction To Total Rewards & Compensation

Total rewards in an organization context include (i) monetary and (ii) non-monetary rewards provided to attract, motivate and retain the employees.

In this short article, I will only introduce the basic knowledge a typical C&B officer / executive should know: -

• Base pay - It is the basic compensation that an employee receives usually as wage or a salary.
• Wages - It is payment directly calculated on the amount of time worked.
• Salary - It is a consistent payment made each period regardless of the number of hours worked.
• Variable Pay - It is compensation linked directly to an individual, team or organizational performance.
• Benefits - Indirect reward given to an employee or a group of employees for organizational membership.
• Entitlement Philosophy - For example, an employee who have worked another year are entitled to pay increase with little regard for performance differences.
• Pay for Performance Philosophy - Requires that compensation changes reflect performance differences.

Exhibit 1: Total Rewards

[source: Ghee, Mathis, Jackson (2010) - Human Resource Management, an Asia Edition]

Exhibit 2: Continuum of Compensation Philosophies

[Modified from source: Ghee, Mathis, Jackson (2010) - Human Resource Management, an Asia Edition]