10+ Compensation Plans Examples in PDF | MS Word


As an employer, isn’t it hard to manage the salaries and benefits of your employees? Are you worried that they might quit because your compensation plans wouldn’t suffice? As featured in an article from Forbes, a Jobvite Job Seeker Insights survey found that 19% of the respondents said compensation is one of the reasons why people transfer jobs. Employees should receive proper compensation since it is a motivational factor for them to work hard. In this article, you will learn more about compensation plans, its importance, and how to create a good compensation plan for your employees.

What Is a Compensation Plan?

A compensation plan consists of salaries, bonuses, benefits, and incentives an employee receives on a monthly or productivity basis. It is crucial for companies to design a good compensation program because employees are highly sensitive when it comes to this. Most companies come up with a compensation strategy to establish the right compensation package for their valuable employees. Implementing an effective compensation plan helps prevent employees from going to other companies that offer better compensation. Moreover, companies must keep up with the market rates so that their employees would be happy and work driven.

Importance of a Compensation Plan

A compensation plan is important to both the employees and the company because it steers an improved job satisfaction, motivates the employees, increases employee loyalty, and boosts their productivity. Eventually, all of these will lead to the overall success of a company. An effective compensation plan also establishes a healthy employer-employee relationship. When employees receive enough compensation, they will feel valued, which will keep them motivated to work harder and give their best performance for the company.

Types of Compensation Plans

1. Straight Salary

Straight salary is the normal wage given to an average employee. The salary is based on the employee’s job title and work description. In this arrangement, the company decides whether or not to raise the employee’s salary base on his or her work performance.

2. Territory Compensation

This type of compensation plan is for employees who work in a team-based company. The management determines the compensation given to the employees by evaluating the territorial volume each respective group made.

3. Salary Plus

This type of compensation plan is when an employee will receive an additional bonus if his or her work productivity exceeds the goals set by the company.

4. Commission Type

This type of compensation plan is a method for sales employees. For every sales transaction they make, they will receive a percentage from it. However, it depends on the company on how much commission the employee will receive for each transaction.

10+  Compensation Plans Examples

1. Sales Compensation Plan Example

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2. Sales Financial Compensation Plan Example

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3. Compensation Plan Flow Diagram Example

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4. Weekly Compensation  Plan Example

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5. Sample Compensation Plan Example

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6. Company Compensation Plan Example

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7. HR Classification and Compensation Plan Example

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8. Executive Performance Incentive Compensation Plan Example

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9. Staff Employee Compensation Plan Example

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10. Employees Deferred Compensation Plan Example

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11. Project Manager Compensation Agreement Plan

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Size: 56

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How To Create a Compensation Plan

There are many templates for compensation plan examples available online. If you want to create your own plan, below are the steps in creating a good compensation plan for your employees.

1. Think About Your Employees

When gathering information for your compensation plan, it is essential to start with your employees. List down the positions and their respective job descriptions. Afterward, think thoroughly about which compensation plan would best suit your company. It would also help to weigh the responsibilities of each employee to determine which compensation you should offer to each of them.

2. Research on the Latest Market Rates

You need to keep up with the latest market rates since most of the companies are giving a competitive salary to their employees. Research on what is the appropriate salary for a specific job position, and strategize how your salary rate will stand out compared to other companies.

3. Plan Your Incentives

Incentives also boost an employee’s work performance. You can offer gift cards or movie tickets to employees who don’t have any record of tardiness or whose productivity is constantly increasing. These little gifts create a positive impact to your employees’ morale since their achievements are being valued.

4. Choose Great Benefits

It is important to offer great benefits to your employees. These benefits will motivate them to work hard and be productive. Most companies offer health, dental, life, and leave benefits because these are mostly what a potential employee would favor.

5. Plan the Budget

You must plan the budget for the compensation that you want to offer. It is important to have a detailed budget plan for the compensation that you will provide for every employee. Doing so avoids budget shortage and guarantees employers that every employee will be covered by the compensation. It also helps in choosing the best compensation that befits your budget.

What Is Executive Compensation Plan?

The executive compensation plan is a structured financial award given to an executive to achieve company goals. It is purely based on the performance of the executive. If it fails, then the incentives won’t be given. On the other hand, if an executive is successful in achieving the company’s goals, then the incentive will be given along with additional awards.

What Is Deferred Compensation Plan?

A deferred compensation plan is when a company or a business withholds a small percentage of an employee’s salary until a certain date. This is usually for future instances such as retirement programs and pensions.

What Are the Example of a Compensation Package?

A few examples of compensation packages are retirement package, incentive and benefits package, and health and life insurance package. There are still more examples of compensation packages, but these are the four main packages an employee would want in his or her compensation.

Compensation plans help manage the salaries and benefits of your employees. If you have offered good compensation plans to your employees, then you don’t have to worry about them transferring to another company for great benefits. The information in this article will help you in creating an effective compensation plan for the employees in your company.

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