When it comes to annual salary and compensation, there can be a bit of confusion. What do these words encompass, how are they defined, and what’s legally required from an employer’s perspective?
Those are just some of the most frequently asked questions when it comes to annual compensation, which is why we’re tackling them—along with many other important questions—below.
Frequently asked questions about annual compensation and everything you need to know about it
1. What’s the difference between annual salary and annual compensation?
2. Are full-time, salaried employees paid for working overtime?
3. Are all U.S. companies required to provide qualified health insurance to their employees?
4. I’m a small business owner with fewer than 50 full-time employees. Should I provide qualified health insurance to employees?
5. How much does it cost to provide health insurance to employees?
6. Are annual salary reviews mandatory in the U.S.?
7. How do you calculate employees’ salaries?
8. How can I calculate the actual cost of an employee?
9. Are employers required to pay severance?
What the experts are saying
Annual compensation, and the reviews that come along with them, can be complicated. We thought we’d let a few experts weigh in with their thoughts on them.
“We need to be justifying compensation more on what people do and accomplish and how they work together (or influence the success of other people) versus just compensating the people who demand the most, and who are the biggest bullies. I think if you can do surveys and assessments of people and collect people analytics data that really shows the contribution that people make, as well has have other people assess each other on how much value they add to the company. There aren’t a lot of companies that do that right now, but I do think that that’s coming.”
People Analytics Experts
“Check job advertisements from your competitors or similar type of jobs in your area. Why? Because these are the jobs that your employees are flocking to if you do not pay them what they desire. Salary surveys are excellent tools, however they are outdated the minute they are printed, especially in today’s tight labor market. Yes, money talks but so does your benefit package and above all–your culture. You can pay someone the highest pay they have ever received, but if your culture is stifling, they will either ‘quit and leave’ or ‘quit and stay.’”
“As the job market changes and an employee’s experience level grows, companies need to consider increasing and monitoring comp levels to be in line with the market, and to show your employees that you value their contribution. Your compensation increases should be frequent—1-2 times per year—and in line with the market rates. In this competitive market, an experienced employee who is even an average performer is worthy of an increase to show your appreciation for their continued commitment and effort.”
Founder of Workology
We hope this post has been both helpful and insightful, and we’d love to hear from you in the comments below. What’s been your biggest struggle with annual compensation?