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Companies reward their employees in two ways: directly and indirectly. This blog explains their differences and how they can help companies understand the overall value of their employee compensation package. Rewards are often expressed in money. For example, Merriam-Webster defines it as "pay for performance." But compensation is more complicated than that. In human resources, payment includes all the ways an employer rewards its employees, directly or indirectly. What does this mean? Let's look at direct and indirect rewards and how HR professionals should communicate them as one compensation package.  Direct and indirect compensation : Defined Direct compensation is a cash payment to an employee for time worked or performance. E.g.: base salary salary bonus incentive After a while Direct compensation typically includes fixed compensation (e.g., base salary) and short- and long-term incentives (e.g., overtime and bonuses). Other non-monetary benefits (including those wi...

Direct and indirect pay are the two main methods businesses use to compensate their employees. The differences between the two are explained in this blog post, along with some suggestions for how employers can assist staff in appreciating the full scope of their compensation. Money is frequently used to describe compensation. Merriam-Webster defines it as "payment given for performing a job," for instance." Compensation, however, is more intricate than that. In human resources, balance refers to all direct and indirect means by which an employer pays its employees. How does that work? Let's review directly vs. HR professionals should communicate direct incentive payout as a single package. Indirect vs. Defined: indirect payment. Employees who work for direct compensation receive financial rewards for their efforts, such as: Starting pay. Wages. Bonuses. Commission. Overtime. In general, direct compensation includes a fixed payment (such as a base salary) and the pos...