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HR basics is a series of short courses designed to highlight what you need to know about a particular human resource management topic in todays HR basics we explore compensation highlighting the three elements of a base compensation system internal alignment external competitiveness and compensation management But first a definition compensation is pay provided by an employer to an employee in return for work Total rewards is a concept that describes all of the tools available to an employer that may be used to attract Motivate engage and retain employees as you can see in this model compensation which we focus on in this course is one left six key rewards available to do so Compensation is comprised of two core elements fixed pay otherwise known as base pay that does not vary and variable paid which changes with performance or results a Basic model for building compensation plans includes three elements internal alignment external competitiveness and Compensation management seven st