Compensation is mathematical correction of a signal overlap between the channels of the emission spectra of different fluorochromes. The purpose of compensation is to allow the measurement of the true fluorescence in the fluorescence channel contaminated by the spillover.
Most modern instrumentation and softwares, for example, Summit, FlowJo, and FACSDiva, can perform computer assisted compensation which is greatly helpful in the case more than two colors or more than one antibody are involved. Usually the compensation process entails first performing runs of single color controls, then the software can work out the compensation spillovers automatically.