1. Money

How Does a Salary Range Work?

By

Definition:

Salary range is the range of pay that has been established to be paid to employees performing a particular job or function. Salary range generally has a minimum pay rate, a maximum pay rate, and a series of mid-range opportunities for pay increases. The salary range is determined by market pay rates, established through market pay studies, for people doing similar work in similar industries in the same region of the country.

Pay rates and salary ranges are also set up by individual employers and recognize the level of education, knowledge, skill, and experience needed to perform each job. The salary range demonstrates the interrelationships of the jobs utilized by an employer. The salary range should reflect employer needs such as the overlap in salary ranges that will allow career development and pay increases without promotion at each level and the percentage of increase the organization will offer an employee for a promotion.

The salary range for executive-level positions is normally the largest; the salary range for lower-level positions is normally the narrowest.

Many companies participate in salary market surveys to create a trustworthy resource for salary research. More and more salary research is occurring online using salary calculators.

Salary range is also affected by additional demographic and market factors. The number of people available to perform a specific job in the employer’s region, competition for employees with the needed skills and education, and the availability of jobs, in general help employers set the salary range for a particular job.

In larger organizations, an entire salary or pay structure is established to classify jobs, the relationship of one job to another, and the salary or pay ranges that fairly compensate the individuals performing the jobs.

Human Resource Management Glossary Index:

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Submit a word for the Glossary | Complete Glossary

Also Known As: compensation range, pay range

©2014 About.com. All rights reserved.