What Is Nonfinancial Compensation?

Non financial compensation can take many forms.
Non financial compensation can take many forms. (Image: Jupiterimages/BananaStock/Getty Images)

Compensation is often an important consideration for both prospective employees and employers. Whether a company is in the startup phase of business or simply wants to reduce its overall expenses, non-financial compensation can be benefit the company's bottom line, as well as, its employees.


For most people, compensation consists of salaries, bonuses, paid time off, health insurance and similar forms of monetary compensation. Financial compensation, while important is not the only type of compensation that is available to employees. When companies offer non-financial compensation, employees have increased access to valuable resources like time, flexibility, and responsibility. All of which can increase the overall productivity and well-being of a workforce.


It is not secret that many employees would like to have more flexibility when it comes to their work schedules. Non-financial compensation like flex-time, can allow employees to choose how and when they handle their assigned job responsibilities, while simultaneously creating a better work-life balance. For employees with young children, elderly parents, or those interested in obtaining an advanced degree while working full-time, may be able to substantially benefit from a more flexible work schedule.

Work Environment

The work environment of a company often has an impact on the productivity and overall well-being of its employees. When a company offers its employees a more relaxed environment in which employees can dress more casually, and take longer lunch breaks, or utilize onsite exercise facilities, employees can experience benefits that are long lasting and beneficial than traditional financial compensation. Likewise, non-financial compensation like telecommuting, which allows employees to perform their job duties from home, can save a company money and improve employee job satisfaction.


Increased job responsibility can be especially beneficial for entry-level employees working in a relatively small company. Employees gain responsibility and experience when exposed to senior level management, which may result in faster career advancement and an increased chance of long-term commitment to the company. To find our about non-financial compensation that may be available at your company, you should contact your human resources department.

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