A compensation plan is a structured approach that organizations use to determine how employees are paid for their work. It includes various elements such as base salary, bonuses, benefits, and incentives. The goal is to attract, motivate, and retain talent while ensuring fairness and competitiveness in the job market. These plans can vary widely depending on the industry, company size, and specific roles. Common types of compensation plans include salary-based, hourly wages, and commission-based structures. Organizations often review and adjust their compensation plans to align with market trends and employee performance, ensuring they remain effective and equitable.