Indirect Compensation: What You Need to Know

Everybody loves freebies and bonuses, especially inside the workplace. These benefits will inspire them to work more and do more for the company. That’s why as a business leader, you must know the importance of giving benefits to your employees for the all their effort. And this is where indirect compensation enters the scene, which we are going to tackle down below.

Indirect Compensation

Indirect compensation, also known as “employee benefits” is a series of bonuses that a company gives to their workers. These bonuses come in different types, big or small. This is a workplace strategy to encourage their employees to stay in their company.


Back in the days, giving bonuses to employees are not a thing. In fact, it was even considered as unnecessary. Fast forward to this day, Human Resources finally understood the importance of employee benefits. It brings plenty of factors to the table such as motivation, hard work, and long-term work for the business.

The more you give bonuses to your employees, the more they’ll become productive and be motivated inside the workplace. They will also feel less stressful and more appreciated inside the company as well.

Indirect Compensation Examples

There are plenty of ways to give employee benefits such as:

  • Extra financial incentive
  • Sick pay
  • Life insurance
  • Christmas Bonus

Other Benefits

Aside from the few that are listed above, there are also extra benefits that is not related to money. For example, we have gym membership coupons, childcare vouchers, and the like. All of these are still called as an indirect compensation even though it’s not financially related.

But it Doesn’t End There

Giving benefits is not limited only to your workers. You can also give benefits to your company as a whole as well. You can host a party, have a night out with all of your fellow workers, and the like. This way, you will garner better relationship between you and all the people in your company.