Compensation is a major motivation strategy in organizations. Employees should be adequately compensated for the services offered otherwise; they will be discouraged to work. In fact, in places where competitors offer better compensation plans, employees are tempted to quit their current workplaces to search for employees in the better paying organizations.
These results to high employee turnover and high costs to the organizations as they continuously recruit and train new employees. In order to avoid this, employees need to feel motivated and thus encouraged to work harder increasing productivity by meeting their targets (McGuire, 2012).