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Define "Compensation" Before Discussing It

Before discussing compensation with a future employer or with a candidate whom you want to employ, it can be helpful to clarify the definition of the word "compensation". Compensation can mean gross pay or net pay. It may include bonus pay or it may exclude it. It may include only cash compensation or it may include benefits, too. Make sure both parties are on the same page to avoid misunderstandings that could cause unnecessary delays or misgivings.

In our work with health systems and physician clients, we often see comparisons to well known survey data — MGMA, AMGA and others. These surveys reflect respondents' viewpoints and often do not convey the full financial picture from the employer's perspective because they usually don't account for benefits and other employment costs. Establishing a narrow definition of the term "compensation" early in these conversations will help avoid any unnecessary confusion.

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This article was previously published on June 22, 2016 and has been updated.

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