How to Establish Salary Ranges?
Salary ranges are of enormous importance to both employers and employees. As a company, you need to know how much to offer prospective team members to demonstrate that you value their contributions.
For job applicants, a salary range could be the most motivating factor in whether they choose your company over another.
Establishing these salary ranges isn’t always the most straightforward task, however. It can be overwhelming, and you don’t want to make the mistake of over or underpaying your staff.
In this guide, we’ll take you through everything you need to know about salary ranges and how to make the most of them. First, let’s start with the basics.
What Are Salary Ranges?
Simply put, salary ranges dictate the lowest and highest salary a company is willing to pay for a particular position. They are commonly featured on job advertisements, and ranges can differ widely.
Employers primarily use salary ranges when writing job advertisements, but ranges are sometimes discussed during interviews. The discussion typically occurs when it’s relevant to the prospective candidate. Sometimes, an employer may ask the employee their desired salary range, and negotiations will proceed.
Any suggested salary range needs investigation before being offered or accepted. This research is generally done through comparison to similar roles and working out an average.
Online salary calculators can be helpful for this purpose, as they automatically compare roles and provide the numbers for you.
Why Are Salary Ranges Important?
Simply put, they provide both applicants and employers with a specific framework to negotiate pay over.
Without numbers, both parties will go into the interview blind, and some applicants may just pass up the opportunity entirely for fear of being underpaid. There are multiple reasons why salary ranges are so important, but let’s take a closer look at some specific examples.
Provides Employers with Flexibility
You could inadvertently drive the perfect candidate away if you only offer a single salary amount when advertising for a new position.
If the number you provide is too low, they may not even bother applying. The flexibility of a salary range accounts for higher goals and implies the possibility of career progression.
Ensures Employees are Paid What They Deserve
As an employer, you will hire people from all backgrounds and skill levels. Incorporating salary ranges into your business means you can give the highest qualified or most experienced staff members the highest pay.
That value of experience can be highly motivating, as staff will have a tangible goal to work towards when improving their performance.
Allow Companies to Budget More Effectively
Managing a company’s finances is no small undertaking, so the more specific you can be, the better. Having salary ranges for each department allows you to better estimate labor costs and prepare for future projects.
Knowing with some certainty how much a new employee may cost is invaluable knowledge.
Increases Applicant Competitiveness
If you have done the proper market research and offer a higher salary range than competitors hiring for a similar role, you’ll catch prospective applicants’ attention.
Not only that, but they will be more enthusiastic through the hiring process as it sends the message that you value what they do. This respect is particularly crucial for younger generations.
All Job Seekers are Looking for It
Lastly, and arguably most importantly, job seekers want to see it. A job advertisement with no indication of salary is a huge red flag.
It looks unprofessional and gives the applicant no insight into how you value their work. It can also give the impression that you haven’t done the necessary market research. Don’t be surprised if an applicant passes you by entirely because you haven’t stated a salary range.
How to Establish Salary Ranges: Step-by-Step Guide
So, now you are converted to the importance of having salary ranges for all your positions, it’s time to discuss how you can establish them. There are various specific criteria you need to consider before making a final decision.
Luckily, we’ve broken it down into several easy steps.
Let’s get into it:
Accurately Identify What the Job Role Entails
First things first, you need to know the details of the job you’re offering entails.
Management roles will always require larger salaries due to the heightened responsibility. Take into account everything you will expect from a staff member fulfilling this role. Those expectations should give you the basis to build your salary ranges.
Compare Similar Job Roles Already Out There
Once you have identified everything the staff member will be doing in their role (or at least have an estimate), you should look to the market to see what other companies are offering. It doesn’t have to be for the same role, as that can be difficult to find.
Instead, look out for roles that carry the same responsibility. This will give you a good reference point for whether you are undervaluing your staff.
Determine Your Standing in the Market
As we mentioned before, salary ranges are great ways to attract the attention of applicants. However, to be truly successful, you should always try to edge out your competition.
The highest salary ranges will always attract the most attention. You shouldn’t over-extend your budget, but try to make the role as attractive as possible. Even just a couple of thousand can make a significant difference.
Include Pay Raise Margins
You don’t need to post these on job advertisements, though stating that there is an opportunity for growth is always advisable. Staff like to know that they can progress through your company, but you should budget this from the start; otherwise, you may run the risk of creating salary ranges that are simply too large.
Keep the minimum and maximum of your salary ranges within a few thousand of each other. Any upper limits beyond the max can be factored in as room for promotion.
Keep an Eye on the Market
The business world is constantly changing, so it makes sense that job roles do too. These changes mean salary ranges that were once appropriate may have changed.
Make sure that you keep up with these changes; otherwise, another company may just recruit all the best applicants before you even get a look.
Don’t lose out on acquiring the best possible talent — keep your eye on the market.
Contact ScoutLogic Today
Recruitment can be stressful, but it doesn’t have to be overwhelming. Once you have established your salary ranges and the applications are rolling in, you need to make sure they are who they say they are. That’s where we come in.
With ScoutLogic, you can rest assured that your prospective team members have nothing to hide.
We utilize vigorous background checks that aim to confirm vital information, such as employment history, qualifications, and so much more.
Need team members you can trust? Then ScoutLogic is the service for you!
Download this free guide to go into the searching process prepared. This guide includes actionable steps to:
- Gather your requirements
- Determine vendors
- Check references
- Determine success metrics