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Acceptable pay range


It refers to what is considered as acceptable to pay for a group of employees (within the same level, class)

It is composed by a middle (median), a minim and a maximum. 


The middle usually is:

  1. Internal level median - for internal equity diagnostics
  2. The benchmark level value (Median, P75, P90, custom percentile) extracted from the salary survey - for external competitiveness analysis


To determine the minimum and the maximum of the acceptable pay range it is used a deviation percentage from the chosen middle.

The most common percentage deviation is +/- 20% from the middle. 


Acceptable pay range = +/- 20% from the middle value




Example:

We want to calculate the Acceptable pay range for level X from our company.

Middle: 1000

Deviation from middle: standard +/- 20%

Maximum: 1200

Minimum: 800


Acceptable pay range = from 800 to 1000


Disclaimer:

The calculation of internal equity and external competitiveness metrics require a system of job classification.

Job classification is a method to determine the value/worth of a job in relation to another.

When using salary surveys the jobs within the company must me evaluated on the same methodology.

For more info you can follow:

https://en.wikipedia.org/wiki/Job_evaluation

https://en.wikipedia.org/wiki/Salary_survey

Or check the well known and established salary survey providers.

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