What does salary range mean

Organizations can either use their job evaluation data to group positions into job grades or use their market data to band together positions based on similar salary survey data. This guide uses the market banding method. An employer can have as many or as few pay grades as it wants. A startup or small organization may have only three or four pay grades. The federal government, by contrast, uses 15 pay grades based on the level of difficulty, responsibility and qualifications required.

Individuals with a high school diploma and no additional experience typically qualify for GS-2 positions; those with a bachelor's degree for GS-5 positions; and those with a master's degree for GS-9 positions.

Employers should note the range of pay in the salary surveys and other information that may be relevant when establishing an average salary.

For each pay grade, an organization will need to establish minimum, midpoint and maximum pay ranges. Often employers consider their midpoint of a salary range to be somewhere between the 25th percentile and the 75th percentile. Some employers will use the 50th percentile, the median, mean or mode if they want to meet the market. If a company's philosophy is to lead the market, the salary point will be above the 50th percentile for most positions.

A simple way to establish a proposed midpoint is to average the market data between the different positions grouped in a grade. There is no hard and fast rule on creating salary ranges.

In this guide, we use the midpoint as the base for developing the salary range. Other methods also are available, such as using the minimum salary as the base. A traditional salary range is commonly 30 percent to 40 percent. It is common that top salary grades i. Broadbanding occurs when employers decide to have very few salary grades and to make those ranges much wider.

Pay grade ranges will usually overlap. The more overlap, the more cost-effective it will be for career progression; less overlap will require a larger pay increase for internal promotions. Each job family can have its own pay grades and pay ranges that are established independently from other job families. At this stage in the process, an employer can look at what it is paying its employees in comparison to the data it has collected and the proposed salary grades and ranges for positions.

The organization may need to make some adjustments, but overall the employer can rely on market data and its pay philosophy to set these ranges. After the salaries for current employees have been placed into the range, several employees will inevitably not be in line with the guidelines and ranges the employer has established.

Strategies to rectify red circle rates include the following:. Green circle rates are equally as problematic as red circle rates in that they do not follow established guidelines. A solution is to provide pay increases up to at least the minimum in the range.

An exception may be if an employee has been performing below expectations. In this case, the employer may want to consider requiring successful completion of a performance improvement plan prior to receiving a pay increase.

Compensation rarely remains static. The rate of pay is constantly changing with external market and economic activity. A salary range is the payment amount between a set of low to high numbers that an employee wants to receive once they're hired by a company. The salary range includes a low, mid and maximum salary point.

Posing a salary range can be a good negotiating tool for employers and interviewees alike. An employee uses a salary range typically during the interview or offer phase of the job search process.

They give the hiring manager an idea of the compensation amount they prefer based on elements like job demand and employee expertise. The employer will examine the salary range and determine the necessary amount to offer the employee within that range.

The salary range is an approximate estimate to help employers understand what the employee hopes to receive and how they value their worth. It's best that employees provide a salary range with a low point being the lowest they can receive while remaining financially stable. Providing companies with a salary range is an effective method potential employees may use to negotiate their pay and benefits. As you determine the salary range to request, you should research and consider various elements before giving the hiring manager any estimations.

Factors that affect salary ranges for different jobs include:. While the salary range for a job applicant is the estimation of pay they'd like to receive, it has a different meaning for an employer. If an employer is providing a salary range, they're giving the range of payment they can supply an employee from lowest to highest. The salary range features the starting pay for the employee, which is the minimum pay rate.

They factor in the raises, promotions and pay bonuses they plan to give an employee as they continue working for the company. This number is the maximum pay rate. The width of the salary range can vary depending on the role in question. Executives applying for leadership roles usually receive a larger salary range than an employee applying for a lower-level position.

The salary paid to the employee may change according to performance, time spent at the job, etc, but any changes will fall within the allocated salary range. Educalingo cookies are used to personalize ads and get web traffic statistics. We also share information about the use of the site with our social media, advertising and analytics partners. View details Got it. Download the app educalingo. Meaning of "salary range" in the English dictionary. Synonyms and antonyms of salary range in the English dictionary of synonyms.

Examples of use in the English literature, quotes and news about salary range. Once a job's salary range has been defined, the general rule of thumb regarding where a person should be "positioned in a salary range " is that a person new to the job by new, I mean less experienced should be paid in the lower end of the Eric P. Bloom, Concentration Concentration refers to a situation in which there is low turnover and employees tend to be concentrated at the top of the salary range.

These may be employees who are still far from retirement but who have accumulated years David Allen Baldwin, Along with promoting internal equity and consistency, a structured salary range gives companies a better ability to compare with competing organizations. HR professionals can visit competitor websites or gather other resources to compare salary ranges. This is much more possible than trying to analyze pay when it is customized for each individual job or employee. If a company finds its pay range is below competitors, it can increase the minimum and maximum to attract better talent.

By Chron Contributor Updated October 19, Qualities of a Compensation Analyst.