ABSTRACT
Compensation is integral to personnel management. There are four key principles that guide compensation policies. Research since the 1960s has led to the emergence of a more optimistic view of the role that compensation might play in motivating excellence from employees. This view is articulated in expectancy theory. The efforts to eliminate race and gender discrimination include providing similar compensation for individuals doing similar work. Two policies apply this general concern: (1) equal pay for equal work and (2) equal pay for work of comparable value. Many state governments and other employers are creating rather large pay ranges, without steps. This is known as broad banding or pay banding. Compensation is a matter of vital importance to employees, taxpayers, board members, and elected officials. It is a matter of policy and political significance, as well as key to management. As with other aspects of public personnel management, there are a variety of conflicting principles and pressures that must be accommodated.
