Compensation for workforce 2020: 7 ways to improve your strategy

Pronoy Roy
min read
Compensation for workforce 2020: 7 ways to improve your strategy


Compensation. A term that many people claim to be their primary motivation to do a job. This blog is a deep dive into why compensation is such a massive motivation driver, what forms of compensation can a company provide and how they can use this as productively as possible.

So What is Compensation?

Compensation is an article, usually monetary that is given to employees for the job that is done by them. The first thing that comes to mind when talking about compensation is wages or salary. Even though that is at large the reason people decide on a job, we can never undermine the impact of incentives, bonuses, benefits and other forms of compensation that are often overlooked.

Each of these is distinct from the other. As every individual is unique, so are their requirements. The Human Resource department often finds ways to tailor compensation to the employee’s needs.  It gets stuck while negotiating on this delicate matter. 

Let us first delve into what forms of compensations exist out there. Although we encourage thinking out of the box, there are some basics that are non-negotiable for employees and they often remain in the realm of the monetary value that the employee expects.

Compensation for the workforce of 2020

Kinds of Compensation 

Base Pay

This is the initial salary or wage agreement between the employer and employee. This agreement is solely in the form of money. Base pay can be decided on an hourly, weekly or annual basis. This pay is merely a part of the cost-to-company calculated of an employee. Base pay is the main source of income for most employees. 

Sales Commission

Sales Commission is a select percentage of the value of the sale that is given to the seller. This works as an incentive to make more sales. The logic behind this kind of an incentive is ‘the more you sell, the more you earn’. This can motivate the employee to make sales but an extreme side of this incentive can create unhealthy levels of competition within the organisation. Any task undertaken should improve team performance, not reduce it.

Overtime Wages

Overtime wages is the money paid for working more than the amount of time agreed upon when joining a job. Usually, firms pay 150% of the base pay on an hourly basis to the employee. Depending on where you are in the world, that figure can change. The region also impacts if there are laws for overtime wages or if there is a limit to how many hours one can work overtime.

Tip Income

As the name suggests, this kind of income is mostly experienced by people in the service industry. Be it food and beverage (F&B) or hotel staff, it is common for employees in this sector to receive a tip for their service. 

In the United States, it is common to give 10%-15% of the bill amount as tip for any kind of service and about 20% if the service is really good.

Bonus Pay

Bonus Pay is given to employees during the holiday season. In South Asia, this can be given during the festivals of ‘Diwali’ or ‘Eid’. In North America and the United Kingdom, this pay is often given out during Christmas. This kind of pay is usually calculated in the cost-to-company as it is culturally recognised to give bonus pay yearly.

Recognition or Merit Pay

This pay is not exactly an incentive. Firms don’t decide on this kind of bonus pay on the joining of a new employee. This pay is given out under rare circumstances where an employee has made an exceptional contribution to a firm. When someone manages to break ground on a big problem the firm was facing or if they have acquired a big client (sometimes known as a shark) for the company, this kind of recognition pay is given out.

Stock Options

Stock Options is a retaining incentive. Often used as a motivation to either join a firm or stay in the firm. Since the stock option usually is a part of the shares of a company, this form of incentive is usually given to high-level employees. There are also certain laws around this effect taxes that the employee incurs. Some firms also add a block-period i.e. the person getting stock options are not allowed to be sold in the market for a certain time period. Sometimes the contract also completely denies sale in the market and if the stock options are to be sold, they would be sold back to the company.


This incentive is one that many employees look forward to. Benefits can include insurance, travel reimbursements, free lunches etc. These benefits often create a positive working culture and are huge support pillars for employees in their work life. Of course, these are also negotiable and change based on the company. In the United States, it is a very common practice for firms to give health insurance to their employees.

Why is Compensation Such a Key Driver for Motivation?

People who claim that they have given up on the ‘worldly-pleasures’ is a scarcity. That, in my opinion, is not going to go away anytime soon.

In a world filled with capitalism and hunger for money, power, and fame, compensation seems to be the means to an end. While some say that they want to be able to provide for their families, most aim for goals well beyond their current means.

When workplaces offer benefits and high levels of compensation, people view it as comforts of life and try to get ‘more’ comfortable. No wonder compensation is the motivation for so many across the globe.

In 2020, How can you Innovate?

As the internet makes the world your neighbourhood, we see a rise in exchange of ideas, people immigrating for better work opportunities and newer ways to innovate. At the centre of it all lies technology. 

With a boom in cloud computing as well as artificial intelligence, there has been a shift in how human resources is using software and platforms to perform tasks. One of the prime examples is integrating banking and software that makes giving out wages or salaries completely automated. 

So here are 7 ways you can improve your compensation strategy in 2020:

Lifestyle Analysis:

Knowing your employees is step one for any change you want to create in a company. If you don’t know the needs of a person, how do you go about fulfilling it? One way you can do that is by having a lifestyle analysis of the people in your firm. This might seem like a big task but a survey deployed throughout can help give you the maximum information.

Collecting the needs of employees and understanding the ‘pain-points’ of the employees is very necessary. 

After the survey, you can check what is working and what isn’t. For example, if your employees spend a considerable portion of their earning on travelling to and from the office, a good incentive to retain employees is having a reimbursement plan in place. 

This will make the employees feel welcome to the firm and can quickly become a major reason they would want to continue working for the firm.

Investing in a Dynamic Workplace:

Monetary value does not need to be necessarily handed over to the employee. The compensation could look like an investment in employee engagement. For example, a dynamic office, where there are no cubicles, freedom to work from anywhere in the office, have bean bags for seats or get standing desks for encouraging health at the workplace. 

These kinds of offices are a rising trend across the world, breaking all the norms that traditional workplaces are built on. Google is a prime example of how dynamic workplaces can create happy employees even under a lot of stress.

Funding Social Groups

Many offices often have a social group or groups that partake in activities outside of work. For example, there is a fun club here at peopleHum that is dedicated to making office fun. These groups have a lot of ideas and methods of implementing these ideas but they are not followed through because of lack of funding. 

If firms start to fund social groups, that would boost activity at the office and improve the working culture, indirectly motivation people to stay at a firm.

Social groups can contribute to employee engagement

Offer academic training

Learning is an important element for everyone. Especially people who are looking to grow in the field that they work in. Because of technology, the availability of online courses on websites like Coursera and Udemy is accessible. A lot of these platforms also offer business plans. This would mean that your employees could take any course on such a platform and the business would pay a set amount for them.

This is a big investment in the employees but as we can all agree on, education can help bring in new ideas that could benefit the company greatly! The power of learning is not something we can underestimate in this era.

Helping employees with finance management

Almost all firms have an accounts department that handles the company’s finances but what if they were also a resource available for personal use. This would encourage people to develop financially and these services would also set you apart from other firms. 

Financial management help can be a very big plus for many people. Especially those who have no idea how to best use their money.

Travelling Packages

A lot of people around the world say that they want to travel after they retire. Why wait till retirement? Some firms offer a fully paid vacation to employees on completion of milestones like completing 3 years at the firm. This is not only a very good method to retain employees but it also promotes hard work and aspirations in employees. On top of that when people do go on such vacations, they come back revitalized, ready for the next 3 years. 

This kind of incentive sets it up for a checkpoint sort of a method.

Stock Options as Merit Pay

Stock options are often given out to senior members of a firm but what if that was not the case? What if stock options were given as rewards for exceptional work done by an employee regardless of age, This would motivate everyone to contribute and innovate in the firm and the respect is then focused on the quality of work instead of mindless age-based respect.


There is room for innovation and ideas. As technology progresses, these ideas and innovation are going to change the way they manifest in the corporate world at a very rapid pace. This could impact employees positively and negatively. 

To retain your employee performers and form teams that really want to contribute to the firm, incentives will have to become creative and targeted towards the people that deserve it the most.

We hope you got some great insights from this blog. Its now time to apply it. Get started with peopleHum for free today. No credit card needed.

We hope you got some great insights from this blog. Its now time to apply it. Get started with peopleHum for free today. No credit card needed.

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