Set the midpoint of your lowest salary range (grade 1) equal to the average of the lowest two market average pay rates as reported on the spreadsheet.
3) Establish Broad Ranges. Once your heirarchy is fully established, you can create salary ranges tailored to your specific company. Let’s say you have 20 spots in your position heirarchy, this shouldn’t translate to 20 salary ranges. Successive positions within the heirarchy should often fall into the same pay range. Instructions. Know the payroll budget. Any salary range will be dependent on the overall payroll budget. Before trying to create a salary range for an individual position, find out what the payroll budget is and how much is available to you. Set a market value. Create a benchmark for how this position compares to similar positions in the marketplace. Compare the functions, responsibilities and salary ranges of this job to comparable jobs in other companies. Remember that job titles may not be enough to compare positions.ook at the salary range for the same position in your market study. Set a range for your own position with a five to 10 percent reach on either side of the market median. Review internal markers. 1 Set grade 4's midpoint 17% higher than grade 3. 2  Continue this process incrementing the range spread 1% for every grade to create a total of 10 to 15 salary grades. 3  Establish the range minimums and maximums by multiplying the midpoints by the numbers indicated in the following chart (refer to the sample): 1 Set the midpoint of your lowest salary range (grade 1) equal to the average of the lowest two market average pay rates as reported on the spreadsheet. 2  Set grade 2's midpoint 15% higher than grade 1. 1 Establish salary range midpoints (refer to the sample): 2  Set the midpoint of your lowest salary range (grade 1) equal to the average of the lowest two market average pay rates as reported on the spreadsheet. 3  Set grade 2's midpoint 15% higher than grade 1. 1 Set the midpoint of your lowest salary range (grade 1) equal to the average of the lowest two market average pay rates as reported on the spreadsheet. 2 $60,000 is the maximum for your salary range. In this example, your full salary range would be $40,000 to $60,000 with a midpoint of $50,000. You are well on your way to establishing your formal compensation plan. If your midpoint is $50,000 and you want your width to be 50%, then you would divide $50,000 by 1.25. This equals $40,000. $40,000 is the minimum for the range. Now to find your maximum, multiply your minimum, $40,000, by 1.50. This equals $60,000. $60,000 is the maximum for your salary range. In this example, your full salary range would be $40,000 to $60,000, with a midpoint of $50,000 1 Set grade 2's midpoint 15% higher than grade 1. 2  Set grade 3's midpoint 16% higher than grade 2. 3  Set grade 4's midpoint 17% higher than grade 3. 4  Continue this process incrementing the range spread 1% for every grade to create a total of 10 to 15 salary grades. 1 Set the midpoint of your lowest salary range (grade 1) equal to the average of the lowest two market average pay rates as reported on the spreadsheet. 2  Ideally, you’ll want to have at least two sources to work from to guarantee the accuracy of your results. Once you have salary market data to use, you can create formal salary ranges. In a future blog post, we’ll describe the process of determining salary range widths. For purposes of this post, we’ll finish by talking about some important analysis that should be done once you have established your formal salary ranges.  Step 2. Calculate how much more the position is worth to a well-qualified employee. Once you have your midpoint, you can add on to that amount to come up with the high end of the salary. One fair way is to establish an overall range, typically set at 40 percent. The midpoint represents center, so the high point would be an average of 17 percent more than the midpoint. This is called width of salary. Step 3. Establish the low point. Go back to your midpoint salary range and if you are still using the 40 percent width rule, deduct 17 percent from the midpoint. This will give you the amount for the low end of the pay spectrum. This equals $60,000. $60,000 is the maximum for your salary range. In this example, your full salary range would be $40,000 to $60,000 with a midpoint of $50,000. You are well on your way to establishing your formal compensation plan. Next comes the work of implementing and communicating your new plan. If your midpoint is $50,000 and you want your width to be 50%, then you would divide $50,000 by 1.25. This equals $40,000. $40,000 is the minimum for the range. Now to find your maximum, multiply your minimum, $40,000, by 1.50. This equals $60,000. $60,000 is the maximum for your salary range. In this example, your full salary range would be $40,000 to $60,000, with a midpoint of $50,000
http://recruiterbox.com/blog/creating-salary-ranges-a-starting-off-point/ http://www.ehow.com/how_5743723_create-salary-range.html http://www.auxillium.com/VirtualHR/salstruc.htm http://www.auxillium.com/VirtualHR/salstruc.htm http://www.payscale.com/compensation-today/2009/04/determining-salary-range-widths-by-profession http://www.auxillium.com/VirtualHR/salstruc.htm http://www.payscale.com/compensation-today/2009/03/typical-salary-ranges-for-todays-market http://smallbusiness.chron.com/figure-out-salary-ranges-10668.html http://www.payscale.com/compensation-today/2009/04/determining-salary-range-widths-by-profession
how to establish salary ranges