​​How wide should your salary ranges be? Like many questions in the world of compensation, it depends.
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Let’s take a look at some of the market benchmarks related to salary range widths and then zoom out for an analysis of how to make the right decision for your company.
First, let’s explore the breakdown of which salary range widths companies most commonly adopt.
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For this analysis, the formula for determining a company's most common band width is (max-min)/mid. For example, the most common salary range width among analyzed companies is 30%, which means +/- 15% from the midpoint. So if the range is $85k to $115k, the formula would be: $115k - $85k = $30k, and $30k / $100k = 30%.Â
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Wider ranges mean less control over potential pay parity issues, a topic that is becoming increasingly top-of-mind for companies with European offices in particular.
Wider ranges unlock more flexibility to reward top performers and give them room to grow within their current range without feeling the need to knee jerk a promotion as the main way to increase their comp once they approach the high end of a range.Â
Wider ranges (for salary at least) ultimately will make their way into job descriptions (JDs) given the new legislative waves. There are pros and cons to consider from a candidate-facing comms and trust-building perspective as it pertains to wider ranges.Â
There are pros and cons either way, but I’d generally suggest that wider ranges give you more wiggle room for special cases. Not to mention more congruence with pay grade style job architectures (e.g. lumping SWEs and AI/ML engineers together in the same job family). On the other hand, narrower ranges give you more control and precision over budget and cost forecasting.
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