Final answer:
Pay compression is a situation where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority. It can result in demotivation and dissatisfaction among employees.
Step-by-step explanation:
The term that describes a situation where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority is pay compression. Pay compression occurs when there is limited or no differentiation in pay between employees, resulting in individuals with more experience and qualifications receiving similar compensation to those who are less experienced. This can lead to demotivation and dissatisfaction among employees, as they may feel their efforts and expertise are not adequately rewarded.