How to Set Standard Salary Ranges

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Standard salary ranges aid in developing fair compensation structures in a business.
Standard salary ranges aid in developing fair compensation structures in a business. (Image: Jupiterimages/Brand X Pictures/Getty Images)

Salary negotiable. Salary commensurate with experience. These two phrases are found in most job advertisements. Companies simply are not comfortable publishing the salary for an advertised position without carefully considering the educational background and experience of the applicant. Personnel and human-resource officers must ensure that employees are paid on an equitable basis, in order to comply with state and federal laws against discrimination. Devising a standard salary range for positions within an organization can enhance the objectivity and transparency of the salary-setting process.

Determine which positions will be subject to a standard salary range and include them on a salary matrix. Consult human-resource officers and other managers about the positions that would be appropriate to include on the matrix. The more positions within the company that can be included in the salary matrix, the more transparent the salary-setting process will become.

Set a minimum salary for each position on the salary range matrix. Seek three sources of information to find a minimum salary: U.S. Bureau of Labor statistics regarding the average salary for each position, local chamber of commerce information about salaries for similar positions in your region, and salaries of employees currently performing the jobs within your company. Offer a minimum salary that is competitive with similar positions in other companies in your locality.

Identify educational qualifications or on-the-job experience for which a candidate will be offered a salary increment. Assign a numerical increment for each qualification or year of experience and include each increment on the salary matrix. For example, if an applicant for a job as an administrative assistant has an associate's degree in office procedures, the company may offer a $2,000 per year increment to the base salary of $23,000; if a candidate for a position as an accountant has two years experience and has passed the certified public accountant (CPA) examination, the company may offer a $3,000 per year increment for the additional years of experience and a $2,000 increment for possessing the CPA qualification.

Determine the top salary for each position. Although your goal is to attract top talent and offer a competitive salary, the position must be worth the money it pays. Work with the management of your company to set a ceiling for each position that fits within the budgetary goals of the company.

Revise your salary matrix as often as necessary. Market values are dynamic; company employment needs and budgets also evolve. Retool the salary matrix to reflect the new reality of the company budget, local economy or job market.

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