Western Governors University (WGU) HRM2100 C232 Introduction to Human Resource Management Practice Exam

Direct compensation refers specifically to the monetary payments made to employees for their work. This includes salaries, wages, and bonuses, which directly impact an employee's earnings and can be easily quantified. Cash payments are a primary form of direct compensation as they provide immediate financial reward for services rendered by the employee.

In contrast, indirect benefits are non-cash benefits offered to employees, such as health insurance, retirement plans, and paid time off. Performance bonuses, while also a form of direct compensation, are considered a subset as they are contingent on achieving certain performance metrics or goals. Pension contributions represent deferred compensation, aimed at providing financial security in an employee's retirement but not classified as direct compensation in terms of immediate payment. Thus, cash payments accurately embody the essence of direct compensation as they represent the actual financial remuneration employees receive for their work.