Indirect compensation applies to a variety of non monetary incentives provided to workers and may range from standard contractual provisions to valuable and appealing benefits.
The direct Compensations are the pay salaries for the hours input in completing the jobs, or in other words, it is a win win situation between the two: the employee and the employer. Both are the beneficiaries in the case. Employees sell their skills against the monetary receipts.
Whereas Indirect compensation is both financial and non financial. Paying other than salary benefits in terms of money is financial indirect compensation, like travel grants etc., and the memberships of clubs and the like are the non financial compensations.
Indirect compensations have several benefits, for example, it creates an attraction for the employee to join any organization. Not only this, but it turns to be a retention tool for the HR departments and strategic owners of the Organization, saving much of the monetary efforts.