In recent years, compassion has attracted the attention of organisational psychologists as there is a huge scope of exploring the domain of compassion in the literature on organisational behaviour. This study fills the gap by investigating the impact of compassion on organisational identification by conducting a survey among the employees working in the financial sector of India. For testing the theoretical model, a sample of 454 respondents was used, and for analysing the data, confirmatory factor analysis and structural equation modelling were employed. The findings indicated that compassion directly affects organisational identification, but indirectly impacts through the mediating effect of positive emotion. The theoretical model as well as all the propositions was supported, and depending on the finding, we proposed both the practical and theoretical implications. Managers need to develop compassionate acts among members in the workplace, which in turn will improve the efficiency and effectiveness of an organisation.