Short Term Compensation

Written by Patricia Skinner
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Basically there are two categories of employee reward for the work that they do on a daily basis: short term and long term compensation. Short term compensation usually refers to salary and annual bonuses. Longer term compensation refers to any kind of multi year bonus program, stock options and the like.

Short Term Compensations Facts

Included with short term compensation are short term incentives. These can take a number of forms but are most likely to be periodic bonus programs, such as quarterly or annual bonuses. Surprisingly, many employees now are more interested in long term incentives than they are in short term schemes, as anything that promises money in the future can contribute to their feelings of security about their old age or future plans.

Generally in the world of human resources, it is acknowledged that executives and senior personnel value long term compensation more highly than short term compensation. But non-executives generally focus first on what they're going to get paid and what they can look forward to on a week-to-week basis. This basic fact should be taken into account by any company wishing to create the most effective pay program.

Programs for short term compensation incentives are important, and more so with the workers in any company, as opposed to executive or management level employees. But more and more individuals are looking to what a company can offer them in the long term. This is a sign of the times. Many see older relatives suffering after having worked hard all their lives, and they're trying to find better solutions that will help them avoid those same pitfalls.


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