How to Create a Salary Structure


Maintaining a company salary structure allows an organization to organize compensation levels, classify job roles, plan budgets and ensure employees have job descriptions, titles and financial room to grow. With salary structure in place when recruiting and hiring staff, you will know where to classify their jobs and their compensation ranges. Use job descriptions and titles along with industry standards, such as the Bureau of Labor Statistics compensation data, to help shape your organization’s salary structure.

Evaluate the current and future positions at your company and create written descriptions of each position. For each, include job responsibilities and titles, and keep the description generalized and not specific to a particular person or company responsibility. Use the same language you might use in a job posting.

Group positions by level such as managers, supervisors, vice presidents, clerks, assistants and so on. Consider your overall payroll and administrative budget. Determine the amount of funds you can allocate to salaries, and what percentage of cost-of-living increases you can afford to offer each year. You may also want to factor in bonus programs if you plan to award performance bonuses.

Establish a system of salary ranges. Within each range, create a minimum, mid-point and maximum salary and give each range a name, such as Group A, Group B and Group C. Compare the grouping of job positions to determine how many ranges you may need. Factor in geographic considerations if you have staff in different parts of the country. For instance, a salary range in New York City will be higher than one in Des Moines, Iowa.

Match the job titles and descriptions to fit within the salary ranges. Use current salary levels and industry averages to complete this classification. Once established, assign specific employees to a job description, title and salary range. Your structure should allow individuals to move within a range without a promotion or bump to the next range.

Purchase a software application that allows you to manage the salary ranges and job descriptions. Many software companies will provide demos and free trial periods before purchase. The software may help with your initial configuration of salary structure and allow you to maintain salary history and run reports based on your company’s job and salary data. If a new program is not within your budget, document salary structure in a current application, such as Excel or Access.

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