What does the principle of control state regarding pay ranges?

The principle of control in compensation management emphasizes the need to maintain effective oversight of labor costs while ensuring equitable pay structures within an organization. By stating that the size of pay ranges should be sufficiently small to control labor costs, this principle supports the idea that narrower pay ranges facilitate better management of expenses associated with employee compensation. Smaller pay ranges enable organizations to make more informed decisions about salary placements, reduce the risk of wage compression, and ensure internal equity among employees performing similar jobs.

Maintaining smaller pay ranges helps in defining clear and competitive salary bands, which in turn aligns with budgetary constraints and strategic financial planning. This control over pay ranges ultimately contributes to a more sustainable compensation strategy, allowing organizations to attract and retain talent without overextending their payroll budgets.