As you prepare to enter the workforce, it's important to understand how companies are compensating their employees today. Compensation is about more than just a paycheck—it’s a dynamic part of the job market that includes salary, bonuses, benefits, and workplace flexibility.

Pay Transparency
Pay transparency is becoming a key focus for many companies as more states and local governments adopt laws requiring disclosure of salary ranges and compensation details. At the federal level, initiatives like the Salary Transparency Act mandate wage range disclosures under the Fair Labor Standards Act, pushing the trend further.

The Rise of Flexible Pay Structures
Employers are moving away from the one-size-fits-all salary approach. Instead, many are adopting more flexible compensation strategies, such as performance-based bonuses. Companies are finding that offering bonuses tied to individual or team performance can motivate employees and align their efforts with the company's goals.

This type of compensation allows employees to earn more based on their contributions, giving them a direct stake in their success at work. These types of programs generally include a base salary plus a monthly, quarterly, or annual bonus conditional on performance targets.

Flexibility Over Pay Increases
While salary increases are always attractive, some employees today are placing a higher value on flexibility. Many workers, especially younger ones, prioritize flexibility in when and where they work. A significant number of employees are even willing to forgo salary increases for flexible work arrangements, which allow them to balance personal responsibilities such as childcare or eldercare. Offering flexibility is a way to retain talent in a competitive job market.

Benefits Matter More Than Ever
Total compensation includes direct financial compensation (e.g., salary, commission, and bonuses), indirect financial compensation (e.g., health insurance, sick leave, and discounts), and non-monetary compensation (e.g., remote work policies, flexible work schedules, and professional development programs). Indirect financial compensation and non-monetary compensation are what people refer to as benefits.

The benefits package a company offers can make a huge difference in job satisfaction. Employers must not only develop a benefits package that not only meets the needs of their employees but also clearly communicate the benefits so employees understand the value of their total compensation.

Looking Forward
Though the Great Resignation has largely run its course, the labor movement has had lasting effects. The Great Resignation refers to the mass wave of employees voluntarily leaving their jobs, starting around 2021, as workers reevaluated their priorities and sought better work-life balance, flexibility, and job satisfaction in the wake of the COVID-19 pandemic. Companies realized they needed to do more than just offer competitive salaries to retain their workforce. They need to create a positive work environment and listen to their employees. Offering personalized benefits, engaging workplace cultures, and clear communication about compensation packages are essential tools for attracting and keeping talent.


In the Classroom
This article can be used to discuss compensating the workforce (Chapter 10: Managing Human Resources).

Discussion Questions

  1. What elements make up total compensation? Provide examples of each.
  2. Why are more companies offering performance-based bonuses?
  3. What factors are causing employees to prioritize flexibility over salary increases?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.