What is the scope of compensation?

Compensation management refers to the process and methodologies followed by an organisation to address employee rewards. It typically involves establishing reward structures and policies, ensuring internal and external competitiveness of the reward practices, and managing statutory compliance on employee compensation.

The scope of compensation includes:

1) Base Salary or Wages: This refers to the fixed part of an employee's compensation, usually paid out as monthly or annual salaries, or hourly wages for hourly employees.

2) Incentives: Incentives are variable compensation that depends on the employees performance or the achievement of specific goals. Common examples include bonuses, sales commissions, and performance-related pay.

3) Benefits: Benefits are non-cash compensation provided by an employer to employees. They can include healthcare coverage, life insurance, retirement plans, paid time off, and flexible working arrangements.

4) Share-Based Compensation: Share-based compensation involves providing employees with shares, stock options, or other equity-related instruments as part of their compensation package.

5) Perquisites: Perquisites are additional non-cash benefits or privileges provided to employees based on their position or status within the organisation. These may includes company cars, club memberships, or executive housing.

6) Allowances: Allowances are fixed amounts of money provided to employees to cover specific business-related expenses. Common examples include travel allowances, meal allowances, and car allowances.

7) Profit-Sharing Plans: Profit-sharing plans are compensation methods where employees share in the organisation's profits or net income.

8) International Compensation: For multinational organisations, compensation scope encompasses the complexities of providing fair and consistent compensation across different countries, taking into account local market factors and regulations.