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Get to Know About 3 Types of Compensation}

Get to Know About 3 Types of Compensation

By MatchKerja

What is Compensation? Quoted from the Kamus Besar Bahasa Indonesia (KBBI), compensation is a reward from a company in the form of money or non-money, which is given to employees. In addition, competitive compensation also has other objectives including:

Attracting Employees. In the recruitment stage, HR usually conveys what compensation the candidate will receive when he is accepted to work. Attractive compensation is certainly the main attraction so that candidates want to join the company.

Retaining Outstanding Employees. Compensation motivates employees to keep working hard. On the other hand, it also aims to prevent high employee turnover rates and increases cost efficiency for the company as well.

Ensuring Fairness in the Company. Compensation is given by the company as a reward for the hard work that has been done or dedicated by an employee to the company.

In general, there are 3 forms of compensation that companies provide to employees.

Direct Compensation. All kinds of company payments given to employees in the form of money such as salaries, allowances, overtime wages, bonuses, commissions, company profit sharing, and other income subject to income tax PPh 21.

Indirect Compensation. All kinds of company payments received by employees which are not in the form of money directly, but in the form of benefits and facilities/conveniences enjoyed by employees. Examples are BPJS Health, BPJS Employment, retirement savings, official vehicle facilities, official homes, daycare facilities at the office, free lunch, training, gym membership, and free parking.

Non-Monetary Compensation. All kinds of company payments received by employees that are not related to money. For companies, this form of compensation is a great way to develop trust from employee without spending a lot of money such as annual leave, 4 months maternity leave, 1 month paternity leave, flexible working hours, events for employees (sports event, awards, etc.), working from home , or a cozy office atmosphere.

What form of compensation have you provided for your employees?

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