Salary structure (ranges) provides a basic tool for managing employee salaries. If you use the midpoint salary as your base (ex. A simple way to establish a proposed midpoint is to average the market data between the different positions grouped in a grade. The Facts Salary grades and salary ranges group job functions into pay ranges in which each position’s compensation is determined according to its placement in a hierarchy of positions above and below it. Not to mention, it can help you retain your current employees, as well as make your recruiting, hiring and promoting efforts more focused and easier to execute. If you continue browsing the site, you agree to the use of cookies on this website. Here are our top tips for not only establishing a salary range for a new position but right-sizing existing salary ranges… Let’s say you have 20 spots in your position heirarchy, this shouldn’t translate to 20 salary ranges. Download this guide to learn how to create salary ranges and implement them. Nikoletta Bika. Set a Salary Policy. 3) Establish Broad Ranges. Here are additional tips that will help an organization set the right salary ranges. For each pay grade, an organization will need to establish a midpoint, a minimum and a maximum pay range. Before trying to create a salary range for an individual position, find … Establishing salary grades and salary ranges are one viable and popular pay structure system. Some argue that you should add $20,000 to establish the top of your range, but where you put that top amount depends on how willing and able you are to negotiate once an offer is made. The quest to come up with a suitable formula to create salary range is an ongoing challenge for many organizations, as industry and economic factors that determine what is "fair" may change rapidly. This promotes internal equity (equity in pay among employees of the company) and helps to manage company payroll costs. 2. www.payscale.com 14,000 Positions 3000 Customers 11 Countries 250 Compensable Factors 41 Million Salary Profiles 3. Step 7: Create a Salary Range Based on Research. Prepare to answer two of the most difficult questions asked in the job offer negotiation process. I didn't know the salary range until the end of the interview or even later. How to Build Pay Grades and Set Salary Ranges 1. Senior Content Writer. The Facts Salary grades and salary ranges group job functions into pay ranges in which each position’s compensation is determined according to its placement in a hierarchy of positions above and below it. How to structure employee compensation. Here are additional tips that will help an organization set the right salary ranges. The ideal salary range must give the employees opportunities and motivation for career development. Set a range for your own position with a five to 10 percent reach on either side of the market median. Once your heirarchy is fully established, you can create salary ranges tailored to your specific company. They involve setting salary ranges and pay grades based on market data and job roles. (Keep in mind, however, that large nonprofits represent only a small percentage of active nonprofits.) Look at the salary range for the same position in your market study. Download this guide to learn how to create salary ranges and implement them. Create Salary Ranges within Pay Grades. Having a solid salary structure makes it easier to manage your salary expenditure. For each pay grade you’ll have to create a minimum, midpoint and maximum pay range. Once I found out the salary range was too low for me, I had already wasted a lot of time and energy. There are no hard and fast rules for these. A traditional salary range is 30%. Any salary range will be dependent on the overall payroll budget. In this guide, we use the midpoint as the base for developing the salary range. The ideal salary range must give the employees opportunities and motivation for career development. For instance, attaining higher education, experience, or additional skills should lead to a higher salary. Successive positions within the heirarchy should often fall into the same pay range. 1. It establishes a minimum and maximum salary that the company will pay for a particular position. The best way to optimize your compensation spend is to take market data and turn it into salary ranges for your jobs.