Small Business Glossary and Definitions

Total Compensation is the full value of the compensation earned by an employee. Total compensation includes direct and indirect compensation. Direct compensation consists of base pay and bonuses or incentive pay. Indirect compensation refers to insurance packages, paid leave, or retirement contributions. Creating statements of total compensation for employees can be helpful to both parties, building trust and transparency between employers and employees. Total Compensation statements can also make indirect compensation feel more valuable because for many employees it is a less-tangible means of compensation.