Compensation
The total financial reward an employee receives for their work, including salary and variable pay.
Compensation is the monetary reward given in exchange for an employee's work. It usually centres on base salary but can include overtime, commission, bonuses and allowances.
A well-designed compensation strategy balances internal fairness with external competitiveness, so employees feel valued and the organisation can attract and keep the talent it needs.
Compensation is often considered alongside benefits and non-financial rewards as part of a wider total reward approach, and transparency around how it is set is increasingly expected.
