Compensation is the total cash and non-cash payments that you give to an employee in exchange for the work they do for your business. Employee benefits are optional, non-wage compensation provided to employees in addition to their normal wages or salaries. The accurate compensation and benefits schemes make sure that hard-working employees are satisfied moderately and in the most cost-effective way for the company.
The differences between compensation and benefit are as follows:
- It is guaranteed payment,
- In presence of compensation, an employee will not get extra motivation.
- This is the payment for the work.
- All of the employees get this.
- Organizations are obligated to provide this.
- Compensations are always tangible.
- It is the same for an equal level of the job.
- Salary and bonus are the examples of compensation.
- It is not guaranteed payment.
- In presence of benefits, employees will be motivated.
- This is extra of the job payment.
- Experienced and skilled workers mainly gain this.
- Organizations are not obligated.
- Benefits may be tangible or intangible.
- It can vary at the same level of the job.
- Retirement plans, health life insurance, life insurance, disability insurance, vacation, employee stock ownership plans, etc. are the example of employee benefits.