In salary compression, workers at the bottom of an organization's pay scale receive relatively high wages while workers at the top receive relatively low wages. This results in a smaller range of salaries between the highest and lowest paid workers.
In human resources, salary compression is the phenomenon of pay rates for certain positions within a company being lower than the pay rates of similar positions in other companies. This can happen when a company is first starting out and they cannot yet afford to pay their employees as much as other companies can. It can also happen when a company is going through financial difficulties and they need to cut costs. Either way, salary compression can cause morale problems within a company, as employees may feel like they are being underpaid compared to their counterparts at other companies.
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