Factors Impacting Where You Fit Into a Salary Range

 

What's a salary range?

“For an employee, a salary range is your target compensation, from the low end (the least you can accept) to the high end (the most you feel you can hope for). For a company, it's the amount that the organization has available to pay a new employee, and what current employees can expect to earn in a specific position” (Doyle. 2021).

How Does a Salary Range Work? (Heathfield, 2020)

Salary range is the range of pay established by employers to pay to staffs performing a particular job or function. The salary range 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 persons 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 every job.

Understanding Pay Ranges (O'Connor and Hyer. 2017)

Having salary ranges is not only an HR best practice, it is also a key administration tool allowing human resources professionals and managers to control worker pay relative to an organization’s compensation philosophy. When constructed properly, a pay range would align with the market while also ensuring positions align with the internal value placed on each job within the organization.

Conducting a market benchmarking project can help establish a range that includes a minimum, midpoint and maximum for each job. But, once established, organizations often struggle with how to implement and administer to the new ranges. There are no hard rules in this area, however we do have some best practices to share.

How to Calculate the Mid-Point of a Salary Range (Kokemuller, 2018)

The midpoint of a salary range is halfway among the high end and low end. If a salary range is scheduled as $45,000 to $55,000, for instance, the midpoint is $50,000. A new hire with minimal experience normally begins at the low end of a salary range. You normally need a few years of experience to start at the midpoint of a salary range.

Factors Impacting Where You Fit Into a Salary Range (Doyle. 2021).

Your place in a salary range depends on factors like: (Doyle. 2021).

·   Experience: The length of time which you have worked in a related functional area and industry can normally influence whether an employer will make an offer at the lower, middle, or higher end of a salary range.

·    Results: Candidates who will show that they added a great deal of value at previous employers will often receive higher offers. Identify the bottom line in your prior employment situations. Was it sales, quality control, safety, cost control, customer satisfaction, the volume of work, and so on? Be prepared to reference how you have impacted the bottom line in your former jobs above and beyond normal expectations.

·    The job market: If there is a relative scarcity of qualified employees in your field, you are more likely to receive offers in the upper level of a salary range.

·    Employment situation: Passive job seekers who are wooed by recruiters and are seemingly satisfied with their present job situation often have more leverage and are more likely to be placed higher in a salary range.

·      Industry: Some sectors like government and education might have strict salary ladders or steps based on previous teaching or administrative experience that supersede other factors.

·     Reputation: Applicants who come highly recommended by previous employers are often viewed as more worthy of placement into the upper end of a salary range.

·    Skillset: Job seekers with cutting-edge skills or certifications can often be in higher demand and receive offers higher up in the salary range.

·      Size of the company: Larger organizations with more formal Human Resources policies are more likely to have set salary ranges, while small organizations may have more flexibility in making salary offers outside normal ranges.

 

References

Doyle, A. (2021) what’s a salary range? [Online] Available at: https://www.thebalancecareers.com/what-is-a-salary-range-2063398 [Accessed on 26thApril, 2022]

Heathfield, S. 2020 How Does a Salary Range Work? [Online] Available at: https://www.thebalancecareers.com/how-does-a-salary-range-work-1918256 [Accessed on 26thApril, 2022]

O'Connor, K and Hyer, J. (2017) Understanding Pay Ranges [Online] Available at: https://www.hrsource.org/maimis/Members/Articles/2017/10/October_17/Understanding_Pay_Ranges.aspx [Accessed on 26thApril, 2022]

Kokemuller, N. (2018) How to Calculate the Mid-Point of a Salary Range [Online] Available at: https://careertrend.com/dispute-salary-range-based-prior-experience-18004.html [Accessed on 26thApril, 2022]

Hsu, Y. (1999) Recruitment and Selection and Human Resource Management in the Taiwanese Cultural Context. Business School University of Plymouth [Online] Available at: https://core.ac.uk/download/pdf/29818879.pdf. Accessed on 4th April, 2022.