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Human Resource Management, 13e (Mondy) Chapter 9 Direct Financial Compensation 9.1 Multiple-Choice Questions 1) Current trends in executive pay involve linking compensation with ________. A) multi-year contract packages B) deferred stock options C) performance results D) seniority systems Answer: C Explanation: C) The business and regulatory environment has changed and many organizations are rethinking executive compensation practices, including pay, bonuses, and severance pay. Performance assessment and accountability are the leading trends, and many executive salaries are now linked to performance results. Diff: 2 Chapter: 9 Skill: Concept LO: 1 2) Which term refers to the total of all rewards provided to employees in return for their services? A) benefits B) commissions C) bonuses D) compensation Answer: D Explanation: D) Compensation is the total of all rewards provided to employees in return for their services. Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and bonuses. Diff: 1 Chapter: 9 Skill: Concept LO: 1 1 Copyright © 2014 Pearson Education, Inc. Indirect compensation is a type of remuneration that typically encompasses non-monetary forms of payment. Direct compensation includes base pay, bonuses, commission, and incentives. Indirect compensation includes paid time off and overtime pay, as well as
benefits that have financial value, but no cash value, such as: Except for government-mandated benefits, organizations can choose
which forms of indirect compensation to incorporate. Understanding indirect compensation is essential for HR leaders. During the hiring process, candidates will want to know what the indirect compensation package includes and how the employer plans to deliver it. During salary and performance reviews, people will likely want to check that they receive their indirect compensation and that it’s easily accessible. Indirect compensation is integral to: Haphazardly compiling an assortment of potentially helpful benefits is not going to cut it. Instead, HR leaders can incorporate these practices to build an indirect compensation plan that will support an engaged workforce: Indirect compensation is a fundamental component of the
overall compensation plan. By offering attractive and pertinent indirect compensation options, companies can nurture a culture that values its people. When people feel that their organization appreciates through prioritizing their wellbeing, they’ll more readily bring dedication, loyalty, and enthusiasm to their work community. What is the most common indirect compensation?9 examples of indirect compensation. Pension plans. Companies manage pension plans on behalf of their employees to ensure professionals have financial security when they retire. ... . Child care benefits. ... . Company cars. ... . Benefits. ... . Overtime pay. ... . Annual leave. ... . Educational benefits. ... . Company technology.. What are the types of indirect financial compensation?Examples of an indirect compensation arrangement include offering your employees health insurance, life insurance, or employee stipends (also called fringe benefits). Social Security, sick leave, a retirement plan, and paid time off (PTO) are also examples of indirect compensation.
Which is the best example of indirect compensation?What are examples of indirect compensation?. Pension funds.. Cell phones.. Company cars.. Health insurance.. Life insurance.. Overtime pay.. Annual leave.. Childcare.. Which benefit currently has the highest cost for employers?How Much Do Employee Benefits Cost on Average?. Health Insurance. Health insurance will typically be the most expensive part of your benefits plan. ... . Workers Compensation. ... . Disability Insurance. ... . Life Insurance. ... . Retirement and Employee Stock Purchase Plan. ... . Contributions to FICA. ... . Unemployment Insurance. ... . Other Voluntary Benefits.. |