Compensation plays a critical role in aligning employee behaviour with business objectives. Since the industrial age, the four Ms of business management i.e. Man, Material, Machine and Money are said to contribute to the business’s success. Among these, man has been considered to be the most important factor contributing to organizational effectiveness and efficiency.
There is no doubt that by employing the right kind of man for the right job can discard the wide space called ineffective business management.
However, human elements such as expectations, emotions, ambitions, egos etc. too contribute a fair amount to business success. Thus, a fair compensation system is created in every organization in order to make the most of most important ‘M’ element.