1. COMPENSATION

2. DEFINITION:
Amount of money and/or benefits a company pays to its employees

3. TYPES OF COMPENSATION

4. HOURLY WAGES Used for many part-time workers
Minimum wage is the lowest hourly wage an employer can pay an employee
Overtime can be paid for working more than regular hours or on holidays

5. SALARY
A fixed amount of money that employees receive on a regular schedule such as weekly, monthly, or bi-weekly
This is often stated as a yearly amount
It does not specify how many hours employees have to work
Employees are expected to complete assigned tasks
No overtime is paid

6. SALARY PLUS COMMISSION
Often found in retail jobs, such as sales
Employers often pay a percentage of the employee’s sales
This is in addition to the employee’s base salary
This works as an incentive to make the employee work harder

7. COMMISSION The employee is paid straight on commission
This is often used for people who sell high priced items such as cars, houses, or insurance

8. INCENTIVE BONUS
Many businesses offer employees a bonus or reward for excellent performance
This is sometimes called variable pay
Companies that set goals often reward employees with cash, trips, cars, or something else of value

9. PERFORMANCE-BASED PAY
Performance-based pay is calculated on the amount of a particular product an employee can make
This is often called piecework. This form of compensation is often used in the clothing industry.
It rewards speed and skill
However, it often leads to abuses such as sweatshops
It also allows people to work at home

10. FEE FOR SERVICE
Often used in the construction, catering, and cleaning businesses
The business estimates how much the job will cost and then builds in the profit
A written contract is signed to prevent misunderstandings

11. ROYALTY AND LICENSING FEES
This type of compensation is used when you write a book, record a song, or have an idea you can sell

12. STOCK OPTIONS Used to attract outstanding employees
The employee has the opportunity to purchase company shares at lower than the market price
The employees benefit because they can purchase the company’s stock at a lower price for a given period of time, even if the stock price increases over that time