July 24, 2023
Cheryl Goh, Product Marketing Manager
Setting salary ranges is a complex task that requires an in-depth understanding of the market, internal equity, and strategic planning. At compensly, we recognize the challenges businesses face in defining pay scales and offer solutions to streamline the process.
A pay scale, or salary structure, comprises various levels of pay for different jobs or job groups, represented by salary bands. Typically, these bands incorporate a minimum, midpoint, and maximum salary level.
To better understand the complexities of compensation, visit our comprehensive guide to compensation benchmarking.
Market research is crucial in setting competitive salary ranges. This involves identifying benchmark jobs commonly found and consistently paid across different industries.
Salary surveys provide insights into pay levels for various positions and skillsets, industry standards, and geographic differences. For instance, our salary survey in Singapore offers a comprehensive look at regional compensation trends.
Geographic and industry variations are vital considerations when setting salary ranges. Cities with higher living costs generally have higher pay scales. Additionally, salary scales can vary greatly between industries.
Ensuring internal equity is as important as maintaining market competitiveness. It involves internal job and salary comparisons to promote fair and equitable pay. The following sections discuss how to use job evaluations and create salary bands.
A job evaluation is a systematic way of determining the value of each job in relation to others within the company. Learn more about the importance of compensation benchmarking and job evaluations in today's job market.
After conducting a job evaluation, you can create salary bands for each position. These ranges should be wide enough to accommodate varying experience and performance levels.
For more insights on how to optimize your compensation strategy, explore how compensly can transform it.
Once salary ranges are established, regular reviews are crucial. Economic factors, inflation rates, and market shifts can significantly affect salary norms.
Transparent pay practices foster trust and engagement among employees. By communicating salary structures clearly, you empower employees to understand their potential career and earning trajectory within the company.
Annual or biannual reviews of salary ranges allow adjustments based on inflation, changes in market pay rates, and shifts in company strategy and goals.
To delve deeper into the significance of continuous monitoring and adaptation of salary structures, consider our blog post on mastering the roles of Head of Total Rewards & Compensation and Benefits Manager.
Establishing effective salary ranges is a strategic endeavor that demands a deep understanding of market pay rates, meticulous job evaluation, and constant adaptability to internal and external changes. It promotes equity, aids in talent management, and contributes to overall organizational success.
For a further understanding of how to leverage compensation data for informed hiring decisions, visit our post on how to use compensation data to make informed hiring decisions.
Unlock the power of salary benchmarking with Compensly and explore how to find the right compensation mix for your team today.