The term salary range refers to a span of competitive compensation paid by employers for a particular job type. Salary ranges are normally stated in terms of grades or bands, which will include both the minimum and maximum compensation paid to employees.
Also known as a competitive salary structure, companies will normally publish the competitive salary range for each position in their organization. Each job-type will be assigned a grade level based on the demand in the marketplace for the required skill set, roles, and responsibilities of the position. These grade levels are then assigned to what a company's research determines are a competitive minimum and maximum compensation structure.
The simple example below demonstrates this point. Entry level positions would be represented in the salary structure by grade level 1, while supervisory positions are assigned to grade level 7. Finally, more senior positions, such as directors, would fall into grade level 14.
Compensation paid to an employee would be considered competitive along the entire width of a range. Employees with greater skills and higher levels of performance will tend to move towards the maximum competitive salary. Companies will publish their salary structure annually, adjusting the bands based on a cost of living index.
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