Types of Compensation

This activity is important because how much employees are paid for their work is a complicated issue. Also, designing a fair compensation plan is an important task because based pay and benefits represent a substantial portion of an organization's expenses. Wages that are too high may result in the company's products being priced too high, making them uncompetitive in the market. Wages that are too low may damage employee morale and result in costly turnover.

The goal of this exercise is to demonstrate your understanding of the different types of compensation and how that compensation is determined.