It helps to think of compensation as anything an employer gives to an employee in exchange for their work.
It is crucial for workers to feel like they are being fairly compensated for their efforts. Different types of compensation can include:
1) Hourly
You get paid a certain amount for each hour you work. Your pay is directly related to how many hours you work.
Hourly compensation can be a great way to ensure you're getting paid for all your work, but it can also be tough to predict your income week-to-week or month-to-month.
Some ways to maintain a more predictable income as an hourly worker are to pick up extra shifts when available or get a part-time job in addition to your full-time gig.
According to the Fair Labor Standards Act (FLSA) overtime laws, hourly workers must be paid time and a half for all hours over 40 in a given week.
Hourly compensation can be excellent for people who:
Salary is the common type of compensation, especially in the United States. It is a set amount that an employee earns per year, and it is usually paid in monthly or bi-weekly installments. Salary is often determined by an employee's experience, education, and skillset.
In some cases, salary may also be negotiable. For example, if a company is recruiting an employee, they may be able to negotiate a higher salary than what was initially offered.
3) Commission
The commission includes a percentage of sales that the company earns. For example, if an employee sells $100 worth of goods in a day, and their commission is set at 20 percent, they would make $20 from that sale. Commissioning can significantly increase an employee's earnings potential, but only if sales are good.
Some types of the commission include:
Whether you are a high-level executive or a line worker, you may be entitled to an annual bonus. Bonuses can be based on company performance, individual performance, or a combination of the two. They're often given out in the form of cash but can also come in the form of stocks, vacation days, or other perks.