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The literal meaning of the compensation is to counter balance. In the case of human resource management, compensation is referred to as money and other benefits by an employee for providing services to his employer. Money and benefits received may be in the different forms - base compensation in money form and various benefits, which may be benefits with the employee's service to the employer like provident fund, gratuity, and insurance scheme, and any other payment which this employee receives or benefits he enjoys in Lieu of such payment. According to Cascio, "compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate the employee to strive for the higher levels of productivity".
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