Introduction Compensation is a systematic process of rewarding individuals after execution of certain functions that are delegated to them. It san important activity in any setting since it shows how well individuals are valued and recognized. As noted, compensation entails ensuring provision of fair and adequate remuneration to workers in an equitable manner. The process should be free from discrimination and it should be guided by well-laid parameters or key determinants that include academic level and experience. It ensures that employees receive what they deserve appropriately. Notably, every organization has a compensation strategy that enables them to pay workers fairly and adequately. The strategies also enable them to plan and reward employees based on their input levels in various business units. Most companies have well written compensation strategies while others operate under work/ life compensation systems. These strategies are instrumental since they provide essential incentives that foster equality. These paper discuses the imperativeness of compensation practices and how the strategies influence decision-making. Conversely, it covers the impact of the strategies on performance in institutions. It adopts Dell Corporation as the company whose compensation strategy is under scrutiny. The company is adopted due to its exemplary performance and effective management of employees. It is also adopted to aid this study since it has experienced few industrial go slows over the years that shows how satisfied its employees are as compared to other companies. Thus, the study is to ascertain how well its compensation strategy is executed and key challenges that the strategy poses. Description of the company and its compensation strategy Dell Company is a renowned corporation that started its operations in the year 1984. The company was founded with a core mission to produce quality computers and electronic gadgets to satisfy consumer needs (Owen, 2013). Since its inception, the company has been recording exemplary performance. This is evident as depicted with its income base that stands at $102billion, its strong asset base, and profitability levels. Similarly, its effective management of employees has seen it improve on its productivity. This is because it does not experience the effects of employee turnovers that have been impeding performance in most institutions (Owen, 2013). This was evident in 2006, when the company was one of the institutions awarded for retaining and nurturing employees due to better terms of work. Notably, the company’s exemplary capacity to manage the resources at its disposal including human capital has enabled it to remain very competitive in the electronic industry. It has a large market share that it has achieved due to the quality of its products. The exemplary performance that the company has been able to record over the years from its first year of business where it reported over $73million is attributable to a number of reasons. Firstly, the performance is attributable to its effective operating strategies that foster innovation and creativity. Secondly, the company’s compensation strategy has been a critical pillar behind its good performance. The activity based compensation stra