“ Compensation refers to a wide range of financial and non-financial rewards to employees for their services rendered to the organisation.” It is paid in form of wages, salaries, and employee benefits such as paid vacations, insurance, maternity leave, free travel facility, retirement benefits etc. monetary payments are a direct form of compensating employees & have a great impact in motivating employees. The system of compensation should be designed in such a way that it achieves following objectives:

1. Capable employees are attracted towards organisation.
2. Employees are motivated for better performance.
3. Employees do not leave employer frequently.