Compensation schemes are structured plans that organizations use to determine how employees are paid for their work. These schemes can include various components such as salaries, bonuses, benefits, and incentives. The goal is to attract, motivate, and retain employees by offering competitive and fair compensation based on their roles and performance. Different types of compensation schemes exist, including salary-based systems, where employees receive a fixed amount, and performance-based systems, which reward employees based on their achievements. Organizations may also implement equity compensation, allowing employees to own shares in the company, aligning their interests with the organization's success.