pay range

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A range or band of pay that is offered to workers in the same job or grade. A pay range consists of a minimum and maximum salary and a midpoint. The latter is usually considered to be the market rate for a fully effective performer in a given job. Workers who are paid below this rate will therefore be newly appointed, undergoing training, in plentiful supply, or classified as less than effective performers. Workers who are paid above the midpoint, conversely, will be experienced, highly skilled, in short supply, and rated as high performers. Salary ranges can be distinguished from incremental scales by the fact that they do not consist of a series of fixed steps: actual salaries can be set at any point between the minimum and maximum points, and therefore managers have greater discretion in deciding what an individual's salary will be. Writers on reward report that there is a trend towards the broadening of pay ranges, in order to give greater scope for managers to respond to labour market signals and reward skill acquisition and performance. Adjacent pay ranges typically overlap so that workers at the top of one range will be paid as much or more than workers at the bottom of another. This arrangement allows recognition of the fact that a high performer in a less demanding job may be worth more to an organization than a new starter or indifferent performer in a more demanding position.

Subjects: Human Resource Management.

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