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A policy to combat pay compression should include a properly designed job- evaluation program, effective performance appraisal, and a realistic merit-increase budget supported by a competitive salary structure.

This paper examines the influence of relative size in the analysis of both total dollar and manpower budgets and changes in total dollar and manpower budgets when correlationallregression methods are used. Data presented suggest that size dominates the analysis of total budgets, is less important when dollar increments and discretionary manpower increments are analyzed, and is not afactor at all when the discretionary dollar increments are analyzed. Our research suggests that analyses of budget increments may provide the basis for more detailed explanations of budgetary decisions than do analyses of total budgets.

Analysis of job evaluation data collected for a study of a state government classification system indicates that different job evaluation methods are likely to produce significantly different versions of an equitable pay structure. The cost of implementing “pay equity” for positions held predominantly by women is likely to vary significantly with the evaluation method employed.

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