I am specifically talking about the cameras that I own – 7D and 5D MKIII.
There is NO flash exposure compensation when the camera is in Manual mode. It lets you dial in a compensation value but it doesn’t have any effect. Compensation from -3 to +3 has no effect on the picture. The camera automatically adjusts the flash power to get a “Correct” exposure. What I mean by “correct” is the camera would try to bring up the exposure of an under-exposed image to match what the metering system thought was the correct exposure – middle grey.
The only way you can get the compensation to work on manual mode is to set the ISO to A – auto.
It doesnt make much sense for a photographer to be in Manual mode – being in complete control of the metering of the camera, and then expecting the E-TTL algorithm to work for the flash. So its a lot more sensible to dial in the M mode on the flash and control flash power/zom either on the flash unit or remotely from the camera (Phottix system allows controlling flash zoom as well).