Offering both compensation and benefits is crucial to attracting and retaining employees. While people often confuse and use the terms compensation and benefits interchangeably, it is important to know that they both serve different purposes.  

Employee compensation  

Compensation refers to the monetary value which employees receive in exchange for their services. These monetary values include wages, salary, commissions, and bonuses.  

Offering competitive compensation is a great way to increase employee retention, as it demonstrates to employees that their hard work is recognized by the company.  

Employee benefits   

Employee benefits are compensation apart from base wages and salaries.  Employee benefits are typically offered to all full-time employees who qualify for them.  

There are some legally required benefits that employers must provide including matching tax contributions for. Medicare and social security, unemployment insurance and workers’ compensation. Employers with at least 50 employees are also required to provide family and medical leave (FMLA) and the Affordable Care Act (ACA) requires employers with 100 or more employees to provide health insurance employees or pay a penalty. Some states also have paid leave requirements, so it is important to understand the employment laws in the states where your employees are located.   

While these are the only required benefits to offer your employees, providing additional benefits can be a great way to retain employees. Some important benefits to consider offering include:  

Why are employee compensation and benefits important?  

When employees are offered both competitive compensation and benefits, they are more motivated to stay with the company long-term. It also helps your company stand out among other competitors and attract top talent 

Offering both competitive compensation and unique benefits are a great way to reward employees for their dedication and loyalty to the company.