What is compensation package?

A compensation package is the combination of salary and fringe benefits an employer provides to an employee. Benefits include such things as vacation days, sick days, personal days, paid company holidays, pension plans, stock ownership plans, health insurance, dental/eye insurance, life insurance, and more.

What is a compensation package example?

Compensation may include hourly wages or an annual salary, plus bonus payments, incentives and benefits, such as group health care coverage, short-term disability insurance and contributions to a retirement savings account. A total compensation package can have several components.

What is a compensation package and benefits?

Put simply, compensation covers people’s direct pay, their salary. Benefits cover employees’ indirect pay, things like health insurance and stock options but also social benefits such as parental leave. Why are compensation and benefits important? Compensation and benefits are important for two reasons.

How do you make a compensation package?

How to Create a Compensation Plan:

Start from scratch.
Create a job description for each position.
Determine the appropriate amount of compensation.
Factor in overtime.
Identify the benefits and incentives that you will provide.
Detail your decisions in a document.

What should I ask in a compensation package?

Total compensation packages include:

employer contribution to health insurance.
life and disability insurance.
stock options.
deferred compensation.
travel allowance.
parking (especially if you work in a city with expensive parking lots!).
paid vacation.
personal days.

How is compensation package calculated?

How to determine total compensation

Start with your base salary. The first step in figuring out your total compensation is knowing your base salary.
Add time-off benefits.
Figure out insurance costs.
Calculate any applicable commissions and/or bonuses.
Assess any other benefits you receive.

What is in a total compensation package?

It includes the employee’s base salary (how much you pay the employee as either the hourly rate or their annual salary), the total dollar amount of the fringe benefits you offer (health insurance, paid time off, retirement plan, profit sharing, gym membership, etc.), bonuses and/or commissions.