Beyond Compensation

Done By:Sudha.S

I MBA (SS)

Indirect Compensation refers to the non monetary benefits in contrast to the direct compensation which refers to the monetary benefits provided to the employees by the organization they serve.

Indirect compensation is not paid directly to the employee. It is calculated as an additional component to the base salary figure. It includes everything from legally obligated health insurance to child care, social security etc.

Indirect Compensation

Insurance Leave Travel Leave Policy Retirement Benefits Flexible timings Hospitalisation Overtime Policy Holiday Lodges

Components of the indirect compensation

To increase employee engagement, many organisations have adopted the provision of Indirect compensation.

Indirect compensation allows employees to enjoy services that make their personal and professional lives easier, thus offering a positive influence to their overall productivity.

J Subramanian, chief group HR, GATI, lists some of the different kinds of indirect compensation that organisations offer to their employees,

“Some common indirect incentives include monetary benefits, health benefits, flexible working hours, sponsorship to study programmes in ivy league universities for various courses, maternity benefits, membership to premium clubs, foreign travel with spouse, stock options and profit-sharing.”

Indirect compensation is not just about monetary benefits; it is also about the various intangible benefits that the organisation can provide. Saba Adil, head-HR, Aegon Religare Life Insurance, explains,

“Indirect compensation is about providing conveniences and additional benefits to employees based on their requirements, so that they can give their best at work. It is a way to show that you care for your employees.

Chaitrali Singh, director - HR, ZS India, tells why professionals today find indirect compensation an attractive feature in their packages,

“People at junior levels typically focus a lot on what their monthly pay is, so it is important that the fixed pay is meaningful enough for them to join. But their stay depends on whether they enjoy their work, feel like they are making an impact and what their learning experience is like. So, indirect compensation does play a key role in defining whether people want to build a long-term career with the firm.”

Hence, professionals today are actively seeking some indirect compensation packages and companies need to leverage their advantages in keeping employees happy.

Conclusion