CompLogix Blog

Direct and Indirect Compensation

The list of desirable employee benefits may have changed, but the importance of communicating their total value remains an important recruitment/retention strategy.

It isn’t uncommon for employees to overlook just how much really goes into the total compensation package they receive in exchange for employment. After all, an hourly wage or a specific salary is the most obvious and direct form of compensation. Understandably, it is one that typically gets the most consideration when recruitment efforts result in a job offer and acceptance.

However, your company likely offers a number of indirect forms of compensation that enhance the long-term value of the offer and, in fact, add up to significant benefits for the employee. Taking time each year to evaluate what is important to your workforce, then following up by determining the feasibility of making those benefits available, can go a long way to not just recruit, but also retain talent. 

Today’s Leveraged Job-Seeker

Today’s job seekers have more leverage than ever before to negotiate the most favorable compensation package possible. ZipRecruiter’s chief people officer Renata Dionello, stated that  we are now in “the golden age of the job-seeker. Basically, there are a lot more open jobs being advertised than people seeking work – it’s an all-time record low ratio. That gives job-seekers enormous negotiating leverage.”

What is Indirect Compensation?

Simply put, indirect compensation pertains to all forms of non-monetary pay your company offers to employees. This definition is simple enough, but itemizing the types of indirect compensation that are attractive to job-seekers isn’t so clear cut. Things like common contractual features (negotiating time off or added sick time) is one example of an indirect benefit. Other employee benefits that have been part of the bargaining discussion for years include things like cell phones, company cars, pension plans, health insurance, life insurance, or childcare benefits. 

Reimagining Employee Benefits

The list of potential benefits that today’s job-seekers want and many times expect has grown to include some non-traditional benefits that yesterday’s “nine-to-five” workplaces would have never considered. Some of these might include:

  • Flexible scheduling or remote work options
  • Adjusted scheduling (i.e. Summer Fridays off)
  • Caregiver or eldercare benefits
  • Paid sabbaticals
  • An on-site gymnasium or gym membership
  • Student loan repayment assistance
  • A corporate kitchen or service that provides healthy, nutritious snacks and beverages
  • Arranged transportation services to/from work
  • Volunteer time off
  • Paid maternity and paternity leave
  • Child or pet adoption assistance
  • A pet-friendly office space

Whatever Benefits Are Offered, it Pays to Clearly Communicate Their Availability

Determining just what benefits make sense for your organization begins with taking time to evaluate what job-seekers in your market want and expect, then determining if they can be feasibly offered as additional “carrots” above and beyond direct compensation given as a means to attract and keep talent. 

Whatever indirect benefits you choose to offer, don’t forget the most important part is to let both prospective and existing employees know just how much your organization invests in them as a key member of your team. Using annual Total Rewards statements or benefits reports can help bring clarity to the types of indirect compensation available and their relative value.

When evaluating compensation management solutions for your business, make sure you choose one that is configurable enough to help your employees see the total value of the compensation and benefits you offer. Complogix has solutions to help bring transparency to both direct and indirect benefits, which can make all the difference in developing strategies to recruit or retain talent.  Contact us today for a complimentary demo.


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