Companies like Google, Microsoft, and Silicon Valley give perks to employees to take advantage of!
It's not surprising that healthcare benefits come out on top of the most desirable employee benefits list in America. But other employee perks like more vacation time, tuition reimbursement, and childcare were also cut.
Americans are stressed! A study says that 31% of employed adults have difficulty with workplace stress, and stress-related healthcare issues and missed work cost employers $300 billion each year. Indirect compensation helps employees get out of stress and thus reinforces productivity.
What are the differences between Indirect Compensation and Direct Compensation?
In simple terms, indirect compensation and direct compensation can be defined as benefits and cash, respectively. But there is more to it. Let’s dig deep to understand the whole idea:
It can be both monetary and non-monetary.
It involves a straightforward monetary reward.
It is not based on performance. The quality of an employee's employment does not affect their health insurance plan or how many sick days they are granted.
Depending on how well they work, employees receive it. A raise or bonus may be given to them if they achieve their objectives.
Experienced workers receive more indirect compensation, such as longer paid vacations and stronger health insurance.
The base salary of both an entry-level and an experienced employee can be the same.
Importance of Indirect Compensation in Recruiting and Retaining Employees:
The importance of indirect compensation is that it frequently plays a crucial role in a business's long-term performance, especially regarding HR and the creation of HR policies.
Competitive remuneration packages are often necessary to recruit top applicants. In exchange for changing positions, candidates anticipate a small compensation raise. Building strong brand linkages with target recruit groups can be aided by a reputation for competitive pay.
For workers, indirect compensation is quite important. As a result, morale and retention rate are higher since they feel more appreciated, inspired, and engaged.
Companies that offer indirect remuneration attract the kinds of talented, devoted, and diligent workers who can best represent the company.