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Importance of CompensationImportance of Compensation
•Impacts employer’s ability to attract, motivate, andImpacts employer’s ability to attract, motivate, andretain employeesretain employees•Ensure optimal levels of employee performance inEnsure optimal levels of employee performance inmeeting organization’s strategic objectivesmeeting organization’s strategic objectives•Compensation’s componentsCompensation’s components
–DirectDirectcompensation in wages or salarycompensation in wages or salary
•Base pay (hourly, weekly, monthly)Base pay (hourly, weekly, monthly)•Incentives (sales bonuses and/or commissions)Incentives (sales bonuses and/or commissions)
–IndirectIndirectcompensation in form of benefitscompensation in form of benefits
•Legally required benefits (e.g., Social Security)Legally required benefits (e.g., Social Security)•Optional (e.g., group health benefits)Optional (e.g., group health benefits)