Compensation structures refer to the systematic approach organizations use to determine employee pay and benefits. These structures often include base salary, bonuses, and additional perks, ensuring that compensation is fair and competitive within the industry. They help align employee performance with organizational goals and can vary based on factors like job role, experience, and market conditions. A well-defined compensation structure can enhance employee satisfaction and retention. It typically involves salary grades or bands, which categorize jobs based on their responsibilities and required skills. This framework allows for transparent communication about pay and helps organizations manage their payroll budgets effectively.