This article aimed at examining the deficiencies of compensation system in Iran’ s Public Sector. The main question is: “ what deficiencies the Iranian Public Sector compensation system are facing? ” To answer this question, we began an exploratory studies including; the review of the literature, the analysis of archival data on formal governmental institutions, as well as the laws and regulations followed by a comparison of practices in several countries. In this qualitative cross-sectional study, data was collected through field observation, the government documents and archive materials and semistructured interviews. To proceed this pathological study, we selected interviewees from Iranian political and administrative experts who were selected based on a purposive and snowball sampling approach. A thematic analysis was used for interpretation of interviews. The study results indicate that the compensation system of Iran’ s Public Sector, in addition to structural deficiencies, suffer from a number of Contextual factors; unclear budgeting system, inadequate taxation system, weak performance management system, demerit system, multiple paralleled decision-making authorities, weak transparency and monitoring, a deformed diversification of compensation orderliness, weakness in managerial, financial and legal structures of governmental agencies and weak legal nature of certain executive agencies.