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Why Is Total Compensation Important to Recruiting and Retaining Employees?

  • Jul 26, 2023
  • Admin Icon Marta Gongos
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Everyone wants a job, but that doesn’t mean that they’ll take just any job. 

Genuine talent is rare and there are countless companies in search of them. In this day and age, you are going to need more than just a competitive salary to convince someone to join your team—the market for employers is competitive, too! 

You need to offer a brilliant compensation package that includes direct compensation as well as indirect compensation such as employee benefits and health insurance. 

In this blog, we’ll discuss the importance of total compensation and how it impacts the recruitment and retention of employees

What Is Total Compensation?

Total compensation is an umbrella term that refers to all forms of monetary payments and benefits given to an employee. This includes base salary, bonus pay, employee benefits, commissions, incentives, lifestyle spending accounts, and tips. 

Base Salary  

Base salary pertains to the money an employee receives after each pay period for performing tasks within the scope of their job description. This does not encompass bonuses, commissions, or benefits. Most employees expect their base salary to increase as they gain tenure and climb the corporate ladder. 

Bonus Pay  

Bonuses are tokens of appreciation that companies offer to employees for exceptional performance or additional time spent working. The monetary value of these bonuses varies dramatically depending on many factors.

Scrabble tiles spelling out the word bonus on top of Canadian bills
Source: unsplash

Employee Benefits and Perks   

Benefits and perks include things like the following:


Depending on the nature of the job, your employees may be entitled to commissions. Commissions are a form of compensation that is earned based on the percentage of sales that are made, either by them or by the organization. 

Lifestyle Spending Accounts  

Lifestyle spending accounts are employer-sponsored benefit systems that allocate funds for discretionary use. These can be used for diverse expenses, such as transportation, home office equipment, transportation, child care, and wellness programs.   

The Power of Total Compensation

Why do you want to work here?”

The answer goes beyond salary. Indirect financial compensation, indirect benefits, and health insurance policies matter to new and existing employees—sometimes even more than direct financial compensation. 

For instance, candidates with children would appreciate the option for extended leave. Younger professionals can benefit from help with student loans. Employees who work from home may appreciate internet bill stipends. Team members who are continuing their education might find importance in tuition reimbursement. 

Offering the right type of benefits instills a sense of value, making employees feel appreciated. Comprehensive payment plans make a specially large impact when they add value to a person’s lifestyle. 

A job interview in progress in a boardroom
Source: Pexels

Total compensation contributes to creating a positive work environment and culture. When your company offers competitive payment packages, the odds are that your team won’t go looking for higher pay elsewhere (or decide to ‘quiet quit’). 

With regard to recruitment, if you’re picking between candidates, you can expect the same of your prospects. Job applicants are also comparing their options based on position, company culture, and pay. If you don’t have the best total compensation package, you run the risk of losing talented candidates to the competition. 

Hire the Best Talent With Ad Culture

You’ll be amazed at who you can have join your team when you think beyond direct compensation—and when you work with us! With Ad Culture by your side, you’ll be hiring new employees who are the whole package and then some. 

We’re a premier boutique recruitment agency that specializes in placing advertising professionals in the best workplaces. Our team promises to speed up the recruitment process without skimping on efficiency or quality. 

Give us a call to start hiring talent today!

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