HomeHR glossaryTotal Compensation
Total Compensation

Total compensation refers to the overall financial and non-financial rewards and benefits that an employee receives from an organization in exchange for their work. It includes both direct monetary compensation, such as base salary, bonuses, and commissions, as well as indirect compensation, such as employee benefits, retirement plans, healthcare coverage, and other perks. The concept of total compensation aims to provide a comprehensive view of the value an employee receives beyond just the salary.


An example of total compensation is when an employee's package includes a base salary of $60,000 per year, an annual performance bonus of 10% based on individual and company performance, health insurance coverage, a retirement savings plan with a company match of up to 5%, and additional benefits like paid time off, flexible working hours, and employee discounts. In this case, the employee's total compensation would include the monetary components (salary and bonus) as well as the non-monetary components (benefits and perks).

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