Performance manegement is basically a hr tool.which set the goal ,lead the goal, and identifywhere the need is to be develped which include performance appraisel.any company ororganization set the performance standards through these standard employee of the organizationare evaluated. It is also process that gives the feedback of the outcomes.it also help theemployee to be on the their track toward organization goal.Compensation Defination:Compansation is a also Hr tool which is providing of monetory benefits and values to theiremployee through thevdefined and standard process of the company that can be in term of salary,bounesand diffirent packages.The organization use the compansation system to sustain theiremployee for the long term and also for the qualty output.Roles of Compensatiom in HRM:In an organization when the company work efficiently and effectively,it gives so much benefitsto company and its employees.This can only be possible if everyone in the organization worktogether and perform every task effective and efficiently.? Compensation makes the employee powerful? Comkpensation is applied on the employees according to rules and regulations? Compensation provides justice in all the departments of the company? Compensation provides different tools and sources to the higher management to makeproper decissions about itRoles of performance in HRM:Performance of any organization depend on the employees.If they work efficiently andeffectively automatically performance will be boosted and growth of the organization also.Thisperformance is measured according to the set standards and policies of the company.There is avery important role of performance in any organization.? Performance managemet is important to achieve the desired set goals and objectives ofthe company? Performance management provides all the status and feedbacks of the employess? PM system evaluates the tasks performed in the organization? PM system clearly states where our employees and organization is standing against theemployeesDiscussions:There is a great impact of compensation on the performance.Compensation is not only inmonetory terms there are many all other elements included in the compensation like? Medical care? Work life balance? Life and accidental assurance? Health and wellnessIn this era people not only work for the money.They want work life balance .They want to enjoytheir lives as well with their friends .If in the organization employes are not given the properbenefits except their basic salary they will be dissatisfied at some extent.A good compensationpackages assures two important elements that is:? Retention:A good compensation packages reduces the turmover rate of the companies.Asthe employees are the assets of the company .To retain the employees it’s the duty of theorganizations and companies to give them the good compensation packages because itwill definitely affect their performance .? Motivation:Compensation is basically a good and foremost factor of the employees throughthis employees are highly motivated and work more harder to reach the set goals of theorganization .Through this we can judge or estimate that there is a great impact of compensationon performance .If the compensation is good the employee will be internally motivated and thinkgood in every aspect for the company .This will ultimately boost up his performance and whenthe performance is boosted up the company starts growing fastly.If we talk about other aspect that compensation packages which are given to employees are notvery good and are very dissatisfactory .This will definitely affect the performance of thecompany .The two main elements which will occur after this and company organizations facethis:? Low job satisfaction:Due to this employees will be less satisfied from their job that they arenot receiving that much which they deserve. Slowly slowly their performance will startdeclining and he will become then low performer of the organization.? Low productivity:The production depends upon totally labour of the organizations if thelabour of the company is not given proper wages they will manufacture less and company willstart going in loss .To retain this to make the performance of the labour good so that theyproduce or manufacture the required quantity they must given the right wages to them.? High turnover:Ultimately when the employees are dissatisfied from their job due to bad compensationsystem the employees will start quiting from their jobs.When the employees start leaving thejobs the company will suffer from loss, their works in the company will start pending andbecome the reason of company breakdowns.To be on safe side companies should make effective compensation plans. Companiesshould have all the knowledge that from which factors their performance will be affected .Tocompete the competitors companies should have proper performance management systems andcompensation systems. Companies should have quarterly annually appraisal systems so that theycan determine the grey areas and once grey areas are detected there should be proper solutionsfor it to overcome it.Conclusion:Well according to the all above discussion performance will definitely affected bycompensation there is a great impact of compensation on the performance .To maintain a healthyenvironment and culture in the organization or any company to give the required happiness totheir employees in the terms of employee perks as discussed above the performance will beboosted up to that extent what the organization wants from the employees. As it is the companyresponsibility to enhance the performances by giving good compensation packages to theiremployees. As the best employees in the company is very difficult to retain so if they are giventhe best compensation packages they will be keep loyal to the company and keep on doing hardwork to achieve the desired outputs.