Compensation & Benefits

Glossary of HR Terms What is Compensation & Benefits

What is Compensation & Benefits?

Compensation & Benefits (C&B), also known as Total Rewards, is the combination of monetary and non-monetary rewards provided to employees in exchange for their work. It includes direct compensation (salaries, bonuses, incentives) and indirect benefits (healthcare, retirement plans, paid time off, wellness programs, and other perks).

Why it matters

Compensation & Benefits is a critical driver of employee attraction, motivation, and retention. A well-designed compensation and benefits strategy ensures employees feel valued and fairly rewarded, while also keeping the organization competitive in the job market. It also plays a key role in compliance, equity, and workforce morale.

Where it fits in the HR stack

Compensation & Benefits is part of the total rewards and employee experience layers of the HR stack. It connects with HRIS (for employee data), payroll systems (for pay execution), benefits administration platforms (for healthcare and retirement), and compensation management software (for planning and equity).

Compensation and benefits that truly fit

Competitive pay and perks are only part of the story. Plum reveals what truly motivates your employees by uncovering their unique drivers and strengths. With these insights, you can tailor compensation and benefits strategies that boost satisfaction, retention, and performance.

Elevate compensation and benefits with Plum

Common use cases/Examples

  • Designing competitive salary structures based on market benchmarking.
  • Offering health, dental, vision, and wellness benefits.
  • Providing retirement contributions such as 401(k) matching.
  • Linking bonuses and incentives to performance outcomes.
  • Expanding perks such as flexible work, tuition reimbursement, or parental leave.

Examples of companies that use it

  • Large enterprises like Google and Microsoft, known for comprehensive compensation and benefits packages including high salaries, equity, and wellness perks.
  • Enterprises like Deloitte or PwC, offering competitive pay along with career development opportunities and extensive health benefits.
  • SMBs and startups using platforms like Gusto, Zenefits, or Rippling to manage payroll, benefits, and perks cost-effectively.

FAQ

Compensation refers to direct financial rewards (salary, bonuses), while benefits cover indirect perks like healthcare, retirement plans, and paid leave.

Most use market benchmarking, job evaluation, and internal equity analysis to design pay structures that attract talent while staying sustainable.

Yes. Flexible work arrangements, wellness programs, and professional development are increasingly valued by employees alongside salary.

Many organizations tie variable pay (bonuses, incentives) to individual, team, or company performance to drive outcomes.

Yes. Even with limited budgets, SMBs can offer flexible perks (remote work, wellness stipends) and use SaaS platforms to manage affordable health and retirement benefits.