Source: Image of dollar bill, man talking to two people, images by Video Scribe, License held by Jeff Carroll. Image of Google logo, Creative Commons, http://bit.ly/1w2OelF.
Hi, I'm Jeff. And in this lesson, we'll learn about different types of workplace compensation and about benefits. So let's get started.
Employees are compensated by businesses in a variety of ways. And we'll discuss the most common versions of these. First, employees are either paid a wage or a salary. Wages are the compensation paid to an employee by an employer based on hours worked.
Salary is the compensation paid to an employee by an employer based on a pay period. And a company chooses whether to pay an employee wages or salary based on requirements in federal law and the rules put in place within the organization. If an employee oversees other employees, for example, then they are often paid a salary, while those that don't can be paid wages.
A company may also add incentive programs that will give an employee pay beyond their normal wages or salary, an incentive program is a series of measures designed and used by an organization to encourage specific behaviors and outcomes by employees. Some examples of incentive programs are bonuses. These are often rewards given for specific goals at an individual or organizational level.
A merit salary system, this is used to provide additional salary for particular achievements. It is often used for jobs that are non-sales-based. Pay for performance, this is when pay is variable based on job performance and is based on measurable criteria. Since an employee can see a direct correlation between extra effort and the extra compensation they receive, this can be an excellent motivator.
Pay for knowledge plan, this is when an employee is compensated more after they receive additional education or develop additional skills that help them perform their job better. This is also motivational, because the employee is being paid to improve their skillset, which can lead to better opportunities in the future. And profit sharing, which is when the organization shares the profit that it makes with individual employees. A company may also offer benefits, which is compensation other than money that is paid to an employee by an employer.
Human resources is the organizational group that handles the development of benefit plans, but all departments will help assess the needs for benefits and contribute to the consideration when benefits are determined. When a company reaches a certain size, law requires that the company provide certain benefits, such as workers compensation in the case of injury, medical insurance, and payments into the social security system. But companies will also voluntarily add benefits in order to boost employee morale and to keep employees from leaving their employment.
Some of these benefits are on-site daycare, payment for continuing education, or work from home options. Companies may even find that providing these benefits saves the company more money than they cost. For example, one company that goes above and beyond with employee benefits is Google.
They offer their employees maternity leave for both parents, legal aid, on-site health care and food services, and even travel insurance. It's their goal to keep employees healthy and happy, since they know that this will allow an employee to focus more on work when they are at Google. So both company and employee benefits.
And that's all for this lesson. Excellent. We learned about the compensation and employee receives from a company, including wages and salary. We learned about the incentive programs used to motivate employees.
We talked about the benefits companies might offer. And we discussed an example of a company that goes far beyond the basics with employee benefits. Thanks for your time, and have a great day.