Compensation refers to the payment or benefits that an employee receives in exchange for their work. This can include a variety of forms, such as salary, bonuses, health insurance, and retirement plans. The goal of compensation is to reward employees for their contributions and to motivate them to perform well in their roles. In addition to financial rewards, compensation can also encompass non-monetary benefits like flexible work hours or professional development opportunities. Companies often design their compensation packages to attract and retain talent, ensuring that employees feel valued and satisfied in their positions. This is crucial for maintaining a productive workplace and fostering employee loyalty.