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Total Compensation

What Is Included Under Total Compensation?

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What-Is-Included-under-Total-Compensation.jpgWhen most people hear the word “compensation” they think about the money received every payday. But total compensation actually far exceeds the salaries offered to your employees. It encompasses the complete package of all forms of money, benefits, and services that are offered to employees.

Understanding the total compensation that you offer your employees—and making that total package visible to your employees—can help attract, motivate, and retain top talent.

Here are common items included under the umbrella term of total compensation.

Base Salary

Of course, base salary is part of the full compensation package. This consists of the total amount you pay your employees for performing their jobs. It doesn’t, however, include benefits, perks, or bonuses.

Base salary does increase with adjustments or raises but it remains the total hourly or yearly wage that is paid.


On top of base salary, you may also offer your employees further monetary incentives to boost performance and motivation. There are three key types of incentives. The first consists of bonuses, which are paid out based on the achievement of performance-based goals, whether as a company, a team, or an individual.

The second is profit sharing, which is an incentive often used by start-ups. With this incentive, the payments are directly tied to the company profits—the profits realized are shared among the staff. These incentives are most often paid once a year in the form of cash.

Third is stock options. With this incentive, employees can buy into company shares for a specific price. Stock options are most often offered to management and key employees.


Commissions are typically used to compensate sales people as a strong incentive for them to offer maximum effort and secure more and better sales for the company. Commission is often calculated as a specific percentage of the sale. Sales people can be straight-commission employees or be offered commission on top of a base salary.

Common Benefits

Common benefits included in a compensation package include a health plan, other types of insurance such as life insurance, and a retirement plan.

Though employees know that they receive these benefits, they’re not always aware of the full cost that the company pays, which is typically several thousand dollars per worker.

Unusual Benefits

Some workplaces go above and beyond with what’s included in their total compensation packages in order to increase motivation and retention. Some of the unusual benefits include contest prizes, a gym membership, on-site daycare, flexible schedules, casual dress codes, paid lunches, or paid parking. The value of lodging, food, or the use of a company car, cellphone, or laptop can also be included in the compensation package.

Though these benefits can be low-cost to the employer, they can add significant value to the compensation package for employees. Though employees will not see the dollar amount of these benefits on their paycheques, they will enjoy their advantages, which can include saved time and less stress.

Time Off

Employees don’t often think of their time off as part of their compensation packages. But if that time is paid, such as paid personal days, paid moving days, or paid vacation time, it is included under the full compensation umbrella.

Make Total Compensation Known

You spend considerable money creating valuable total compensation packages for your employees. If you do not disclose all that is included in the package and the benefits’ value, your employees may feel underpaid and underappreciated.

By increasing visibility of the total rewards they receive, you can gain further advantages from your investment in their total compensation packages and ensure that your employees feel valued. As a result, you will improve motivation, build loyalty, and boost retention.


Darwyne Lang

Darwyne Lang

Darwyne is the president and CEO of Apri Insurance Services Inc. Having worked in the industry for over 30 years, he lives the benefits business every day. He is a Chartered Life Underwriter (CLU). He understand the needs, costs, misconceptions, and effects on brand and culture, and the importance of benefits for employees. No matter what he’s doing, whether for work or pleasure, Darwyne competes at a very high level. He loves to lead and innovate in everything he does.

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