The choice of a compensation system is very important to managers because it affects efficiency and productivity employees. Thus the option 3rd is correct.
Compensation refers to the monetary reward given to the employees for their performances in the company. In the workplace, employees earns the compensation.
It includes salary or wages in addition to commission and any incentives or perks that comes as the reward to the employees. It is basically the incentives provided to them in order to motivate them.
The compensation increases the productivity and efficiency of the employees as it boost the confidence and makes the them feels that they had accomplished something in the organization.
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