The author reveals the economic essence of the compensation package and its structure on the basis of the cost approach, which underlies the justification of the cost and the price of the created product. Costs associated with labor are its integral part. The article analyzes the definitions of such concepts as "compensation" and "compensation package" given by the authors of different scientific schools and directions. It also features the principles of formation of compensation package and its functions. When examining the essence of the compensation package, most scientists focus only on its volume component, which does not reveal the economic nature of this category. The compensation package from the position of the cost approach is defined as the converted form of cost (price) of all expenses of the employee incurred by him or her in the course of performance of functional duties according to the employment contract. The possibility of establishing the dependence of the volume and structure of the compensation package on the quality of human capital and the labor results of a specific employee allows the employer to use it as a powerful tool for motivating the personnel of the organization. The compensation package, as a complex multifunctional incentive, makes it possible for the employer to form the structure of the organization's personnel based on its strategic goals and the current tasks arising from them, to attract and retain valuable employees, as well as to increase the loyalty of the staff and motivate them to highly effective work.