What are the principles underlying employee compensation?
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Compensation is the HRM activity that deals with every type of reward that individuals receive for performing organizational tasks. It is basically an exchange relationship. Employees exchange their labour for financial and non-financial rewards. Financial compensation is both direct and indirect. Direct financial compensation consists of the pay an employee receives in the form of wages, salary, bonuses, and commissions. Indirect financial compensation (also called “benefits”) consists of all the rewards that are not included in direct compensation, such as vacation time and insurance coverage.
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