Not everything that can be counted counts, and not everything that counts can be counted.
—Attributed to Albert Einstein, awarded the Nobel Prize in Physics
Compensation can take many forms: pay, benefits, job satisfaction, camaraderie at work, hope for promotion, and more. For this discussion, the word “compensation” refers only to cash remuneration for work. That can include three components: base pay, incentives, and differentials.
Base pay is the salary or hourly wage. Incentives are designed to motivate workers to do more—more quickly, more accurately, and more cooperatively. Incentives often are paid as bonuses. Differentials are unique pay components related to work time or locations, or other less desirable ...