Compensation and motivation are two things which go hand in hand in business management. Motivation is important in any field, whether it is a business, armed services or even in sports. On the other hand compensation is an effective lever used world wide to inspire and motivate an individual. It orbits around a common principle of taking extra than the current market standard and giving a performance of hindered and ten percent. It is seen that without motivation an individual cannot perform at its best even if the circumstances are constructive, favorable and conducive (Greer, 2003). In today’s world many organizations operate in very competitive and cutthroat conditions as paramount performance is being demanded by them. They have to recruit those individuals who are best of the best and can take organization to a new pedestal. The concept of performance based payment system is also associated with it. If we take a leaf from history, we come to know that there performance based system was there at the time of industrial revolution in eighteen century in Britain. Then it was fine tuned and was made individual performance based system. The point behind bringing this piece of information is to tell the reader that there has been a lot of work done on this system before and it is something which is not alien in the field of human resource management as it has been practiced years ago. In this paper, compensation and motivation are described in individual at first and then followed by a conclusion in the end (Greer, 2003).