Compensation management involves balancing the employee-employer relationship through monetary and non-monetary benefits. Compensation includes direct payments like bonuses and commissions as well as indirect perks like company housing and stock options. It is an important part of human resource management that helps motivate employees and improve organizational effectiveness. Compensation establishes standards for employee contributions and performance while minimizing turnover to achieve a stable workforce. It also complies with labor laws to avoid disputes and build positive relationships between management and employees.