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Employers use a compensation philosophy and plan to strive to meet the compensation needs of employees and to meet company objectives and goals.  Total compensation includes all forms of financial proceeds that employees receive from their employers. Direct compensation includes but is not limited to; salary, wages, differential pay, bonuses, cash recognition, and achievement awards. Indirect compensation includes but is not limited; to legally required benefits, health benefits, flexible benefit plans, deferred pay, pay for time not worked, and unpaid leave.  The total compensation plan should be cost-effective, compliant with local, state and federal laws and compatible with the organization’s mission and strategies.

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Sample Compensation Philosophy and Plan