How to Create a Salary Range

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No salary range is created in a vacuum. A position’s relationship to other positions in the company and the market will determine its pay range. Setting a competitive pay range for a position is essential to hiring and retaining the most talented employees.

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. Similar positions may have dissimilar titles.

Set a salary range. Look 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. Compare the range you have set to what your payroll budget will allow and to other similar positions within your own company. If it falls within those parameters, your competitive salary range is set. If it is too high, adjust it accordingly. Be aware that if you have to lower it too much, you may not be competitive in the job market. Consider either adjusting the job responsibilities to be more market appropriate or approaching senior management about increasing the amount of the payroll budget available to you.


  • is an excellent resource for determining a position's market value.