Definition of Compensation or What is Compensation?

To survive in a complex, competitive global company all organization (Public & Private) must be able to focus on the effective an efficient supply of goods and service. A key factor in promoting effective delivery of goods and service is provision of a performance base compensation system to the employees.

Many Author have defined compensation which are mentioned below
1. Dale Yoder: “Compensation is paying people for work.”
2.Benham: Compensation is the value of work of the employees according to the agreement between employer and employee.
3. John Dunlop: Has explained the concept of the compensation wages from three stands points:
(a) Wages determind the standard of volume of service of employees of market.
(b) compensation Influences distribution of employment of industries, firms and professional organization
by impact on cost.
(c) Compensation has performed some important activities like supply of active media through which
technological  facilities have been scattered through the economy.

Objective of compensation

Compensation have some important objectives. To achieve these objectives a well conceived compensation scheme or plan may be established. These objectives are mentioned in the following points:
1. To be legal: It must get approval from the govt or top management in the organization.
2. To be adequate: Compensation must be sufficient so that needs of the employees are fulfilled substantially.
3. To be motivational: Compensation must be increase the level of motivation and job satisfaction of the employees.
4. To be equitable: Compensation policy should be declared in such a way so that no discrimination can be shown.
5. To provide security: Employees must have guarantee  of getting wages or compensation regularly without any work.
6. To be cost-benefit effective: the organization must be make a balance between cost for giving compensation and benefits to be
accrued from the employees.