In engineering, compensation is planning for side effects or other unintended issues in a design. In a more simpler term, it's a "counter-procedure" plan on expected side effect performed to produce more efficient and useful results. The design of an invention can itself also be to compensate for some other existing issue or exception.
One example is in a voltage-controlled crystal oscillator (VCXO), which is normally affected not only by voltage, but to a lesser extent by temperature. A temperature-compensated version (a TCVCXO) is designed so that heat buildup within the enclosure of a transmitter or other such device will not alter the piezoelectric effect, thereby causing frequency drift.
Another example is motion compensation on digital cameras and video cameras, which keep a picture steady and not blurry.
Other examples in electrical engineering include:
There are also examples in civil engineering: