8 Tips on How to Create Salary Ranges for Roles
What is one tip on how to create salary ranges for specific roles?
To help you establish salary ranges for different roles in your company, we asked HR and recruiting experts and business leaders this question for their best advice. From conducting a job analysis to looking at the competition, there are several ideas that may help you determine a salary range for your next open position. Let’s dive in!
Contents
Know the organizational needs
Create a level system based on experience
Conduct a job analysis
Develop salary rubrics and be transparent
Assess your budget and ROI
Ask your candidates
Look at the competition
Consider regional differences
Know the organizational needs
When we, at Strelcheck Healthcare Search, take on a new client, I conduct an on-site visit to get a comprehensive overview of their needs, which includes the salary range for the role.
It’s essential that we understand our client’s compensation philosophy when we develop a recruiting strategy. We take that information and conduct market research to create a package that will attract the right new hire.
Create a level system based on experience
One way to establish a salary range is through a well-defined “Level System.” When we first created our internal job-specific level system, it started with a lot of research. But once the research was done, we used the data to create a level system based on years of experience in the field or within the company.
Each role has a unique path, so we can easily compare the candidate to one of five levels when we hire. This takes away the ambiguity of a range and showcases it as a career and pay progression.
Conduct a job analysis
You can determine the essential skills and responsibilities required for a position with a job analysis. A job analysis can aid in determining the education and experience needed and whether the job manages employees. Understanding these components can help benchmark the job against similar roles in a particular industry and job family.
Develop salary rubrics and be transparent
We have certain rubrics – essentially, scoring guides – that we refer to for creating our salary amounts. We are transparent about these rubrics when discussing compensation with those interested in working with us.
Having a reliable and values-based system that we can rely on to come up with our salary amounts and salary ranges is incredibly helpful because it allows us to be precise, rather than just guessing what would be an appropriate salary. We want our employees to know our line of thinking so that they can see we are genuine and thoughtful.
Assess your budget and ROI
Look at what you can afford. This will dictate how much you can spend on hiring new employees for specific roles.
Also, look at the ROI of this position and how much you will get in return from this employee. For example, if you are hiring a salesperson and this person is projected to bring in $150,000 in revenue each year, then you can afford to spend around $75,000 on this employee.
Judge the market and look at what you can afford to spend on this specific role when creating a salary range for the position.
Ask your candidates
One way to create a salary range for a specific role is to ask your candidates what their personal salary expectations are for the role. Doing this will give you a range of what your candidates will be expecting from an offer, and it will give you the ability to make an accurate salary range for the position.
Obviously, you must only offer what you can afford. Still, if most of your candidates are asking for a specific range, and it is affordable for your business, you have your salary range for the position.
This way, you can ensure that your salary range is competitive and acceptable to quality candidates.
Look at the competition
When it comes to creating salary ranges for specific roles, see what the competition is paying. Make sure what you’re offering will attract candidates to your business. Salary ranges vary widely for many positions. It can be helpful to choose the median and negotiate from there.
Consider regional differences
Evaluate and incorporate the cost of living differences based on candidate locations. A $30,000 average salary for a position in Arizona may require a $70,000 base salary to be competitive in New York.
However, more and more companies hiring for remote roles are moving away from this strategy and are implementing location-agnostic pay models. That’s why it’s important to consider regional differences in the context of your industry and the jobs you’re hiring for.
In conclusion
Creating salary ranges is a complex process where you have to take multiple factors into account to be able to offer fair, equitable compensation. If you’re methodical, you can be sure that your organization offers competitive salaries.
These expert insights have been collected by Terkel. Terkel creates community-driven content featuring expert insights.
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