Every employer has given a fair amount of thought to employees’ salaries and what percentage of salary increase you should give your employees. Perhaps you’ve also talked with managers about what salary to offer a candidate they want to hire or what a new salary should be for someone who has shifted into a new role within the company. These are all common compensation conversations that happen in every business over time.

Rather than doing all this constant wondering, It’s essential to put in the time and effort to develop a formal salary structure along with salary ranges, which will pay off in the long run. A salary structure helps inform all compensation related decisions your business goes through and allows you to approach them in a market-based, internally equitable, intuitive, and efficient, timely manner.

What is a Salary Range & Salary Structure?

As the name suggests, a salary range is the range of pay for a specific job or group of jobs. It will usually involve the minimum pay rate as well as the maxi-mum. It is used as the minimum, or maximum a company is willing to pay when hiring a new employee. It’s also used to indicate the level of experience and qualification which might be considered essential for a role while also leaving options open for individuals to apply who might usually be above or below the average salary.

A salary structure, also known as a pay structure, is an organization’s hierarchal group of jobs and salary ranges. Salary structures often are expressed as pay grades or job grades that reflect the value of a job in the external market and/or the internal value to an organization. The system is used to determine an employee’s compensation and help when calculating raises. For this to be done, each salary structure is broken down into levels, also known as pay grades.

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