Salary Range Standardization
Methods for calculating, standardizing, and publishing pay ranges
Why This Matters
Standardized salary ranges create transparency, consistency, and defensibility in compensation decisions. Without clear ranges, pay equity compliance is difficult to demonstrate and bias easily creeps into individual negotiations. Ranges must be wide enough to accommodate legitimate variation (experience, performance, geography) but narrow enough to prevent discriminatory disparities. Range standardization also facilitates market competitiveness, internal equity, budget planning, and clear career paths. Organizations with well-defined salary ranges show 40% less unexplained pay variation and 50% fewer pay discrimination complaints.
How It's Measured
Range quality is assessed through: spread analysis (ratio of maximum to minimum, typically 1.3-1.8 for most roles), market alignment (comparison of ranges to reliable compensation surveys), internal equity (ensuring similar roles have similar ranges regardless of department), usage rates (percentage of employees falling within posted ranges vs. exceptions), and consistency of range assignment methodologies. Compliance with transparency laws requires that published ranges match actual ranges used for pay decisions and that ranges are specific enough to be meaningful (not spanning $50K-$500K for a single role).
How to Comply & Mitigate Risk
Organizations should: conduct comprehensive job architecture projects to define clear job levels and families, use multiple reliable market data sources to benchmark positions, establish consistent methodologies for setting range midpoints and spreads, document criteria for range placement decisions, review and update ranges regularly (at least annually) to reflect market movement, ensure ranges are wide enough for career growth but tight enough to prevent inequity, create clear policies about when and how employees can exceed ranges, and provide training to managers on using ranges appropriately. Published ranges should accurately reflect actual compensation practices to maintain credibility and legal compliance.
Common Requirements
Range calculation methodologies
Minimum-maximum spread requirements
Job classification systems
Benchmarking standards
Jurisdictions with Salary Range Standardization Requirements
1 jurisdiction has legislation covering this topic area