Employee Compensation vs. Employee Benefits Packages – Which is More Important?

September 29, 2023

With the surge in remote and hybrid work in recent years, the workforce is rethinking their approach towards pay and benefits. What may have worked in the past is no longer serving them well in today’s work environment. Employees are seeking the most equitable forms of compensation and benefits now more than ever. As an HR manager, you are likely trying to make your positions as attractive as possible to the modern professional.

In this post, we will look at compensations and perks and how these types of packages work, as well as what to consider when structuring your own employee benefits package with the help of Talentia’s Pay Review Software.

What is employee compensation?

Simply put, compensation is the direct payment that employees receive for performing a job at their place of employment. On the other hand, employee benefits are an indirect payment that someone may receive in addition to their regular compensation.

How are compensation packages structured?

While both types of compensation are important, a mix of both salary and additional benefits is often the best way to structure these offers. A well-rounded pay package can provide your employees with a strong incentive to work and increase their commitment to the company.

Compensation packages typically include the following:

  • Salary or hourly rate.
  • Company contributions to insurance premiums and retirement savings.
  • Reimbursement program offerings (i.e: education, travel, transportation, etc.).

Types of Employee Benefits

If you are not sure where to begin when it comes to your own employees, start by asking yourself this question: “What are the things, other than money, that matter the most to our staff in this company?”.

Employee benefits can be divided into two categories: monetary and non-monetary benefits, which can include but are not limited to the following:

Monetary benefits

  • Equity compensation
  • Stock options
  • Medical insurance
  • Retirement savings options

Non-monetary benefits

  • Flexible work schedule
  • Paid time off (PTO)
  • Learning and development opportunities
  • Training and conference attendance
  • Transportation benefits
  • Restaurant vouchers

What to consider when choosing an employee benefits program

As we mentioned earlier, a rewarding employee benefits package will attract high-performing talent and candidates, thereby increasing motivation, improving retention and creating a more positive work environment for your company.

Consider these 3 key aspects when deciding what to include in your employee benefits package:

Offer financial incentives

To be effective, HR managers need the tools to make fair and transparent compensation decisions. A common strategy for attracting and retaining top talent is through financial incentives. This can include a mix of pay and benefits that will enrich the lives of your employees.

Reward performance

Implementing reward strategies that recognize high performers while adhering to compensation policies is the standard. By giving recognition where it is due, teams will be happier and more motivated to stay with your company. With Talentia’s solution, managers can benefit from the software’s automated recommendations based on configurable pay structures, compensation benchmarks and performance reviews.

Switch from spreadsheets to pay review software

By eliminating spreadsheets, valuable time can be saved, and errors are reduced. With Talentia Reward, everything can be stored in one place thus making it easy to maintain control of both the data and the entire process. The built-in workflow feature delivers all compensation tasks to the correct people with timely reminders and notifications.

At Talentia, we provide a complete and comprehensive solution to support your compensation decisions. You can forget about the difficulty of managing spreadsheet approaches and give yourself peace of mind knowing you are offering your teams the best possible employee benefits package. Our Pay Review tool can help you find the right balance between budget constraints, talent engagement and retention policies.