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The main reason for compensation is to give employees the right reward from his behavior. Compensation always goes hand in hand with an organizations financial performance because a well compensated employee will have a boosted morale to work even harder and this eventually converts to better financial performance of the organization. Poor or lack of compensation will lead to poor performance by employees and thus poor performance by the organization.
If an organization is under performing financially, employees are likely to receive less compensation as the
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the organization for instance one that is making losses has no much money to spend. On the other hand an organization that is financially over performing and thus making big profits is likely to spend more on it's employees' compensation.
Am sorry, my internet connection went down while submitting and I had lost the last part thats why the answer is in two parts
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