What is a typical salary range structure?

A common approach is to build a 30% range around a midpoint. Employers often set the minimum at 80% of the midpoint and the maximum at 115% of the midpoint. This creates enough room for salary growth while maintaining consistency.

How often should salary ranges be updated?

Salary ranges should be reviewed at least annually. Adjust based on market trends, inflation, and evolving job responsibilities.

Why are salary ranges important?

They promote internal fairness, ensure market competitiveness, and help businesses comply with evolving pay transparency laws.

How can I make sure salary ranges stay competitive?

Use tools like the Bureau of Labor Statistics, industry surveys, and compensation platforms to compare pay levels across similar roles.

What’s the difference between salary range and salary band?

They’re often used interchangeably, but a salary band may apply to a group of related roles, while a range typically applies to a specific position.

September 02, 2025 in Payroll

How to Build Fair and Competitive Salary Ranges in 2025

By: Danielle Levine

Setting the right salary ranges is more than a payroll exercise. It's a strategic move that can shape recruitment, retention, morale, and even compliance.

Whether you're trying to stay competitive in a tough labor market or ensure fairness across departments, having a clear compensation structure is essential. Here's how to build one that works for your business in 2025.

What Is a Salary Range?
How to Build Salary Ranges in 7 Steps
Why Salary Ranges Matter
Frequently Asked Questions (FAQs)

What Is a Salary Range?

A salary range is the spread of pay established for a given role, with a minimum, midpoint, and maximum rate. This range helps businesses make informed and consistent compensation decisions across their organization.

Salary ranges typically factor in:

Job responsibilities and skill level
Education and experience
Internal equity and tenure
Market competitiveness for similar roles

How to Build Salary Ranges in 7 Steps

1. Start With Accurate Job Descriptions

You can’t build fair pay ranges without knowing exactly what each job entails. Review your job descriptions to ensure they reflect:

Actual duties and required outputs
Necessary certifications or education
Levels of decision-making and accountability
Technical or soft skills needed to succeed

This creates a baseline for role comparison, both internally and in the market.

2. Evaluate the Role’s Business Impact

Not every job drives value the same way. A specialized technician might be harder to replace than an entry-level assistant, even if the assistant works longer hours.

Evaluate:

How critical the role is to operations
The potential cost of turnover
Strategic importance to your growth plans

3. Use Market Data to Set Pay Benchmarks

Market benchmarks ground your salary ranges in reality. Consider tools like:

Bureau of Labor Statistics (BLS) for national and regional pay data
Industry-specific salary surveys (especially helpful in healthcare and homecare)
Aggregated platforms like Payscale or Indeed Salaries

Focus on organizations similar in size, region, and industry.

Pro tip: If you operate in homecare, benchmark against agencies with similar caseloads and services, not hospitals or large clinics.

4. Determine Your Compensation Philosophy

Where do you want to fall in the market?

Lead the market: Attract top talent quickly, but be ready to budget higher
Match the market: Stay competitive without overextending
Lag the market intentionally: This may work in low-cost regions, but risks losing strong candidates

Your compensation philosophy should align with your recruitment and retention goals.

5. Build the Range: Minimum, Midpoint, and Maximum

Once you’ve identified a fair midpoint for a given role, build your salary range around it. A common approach is to apply a 30% range, where:

Minimum = 0.8 × midpoint
Maximum = 1.15 × midpoint

For example, if the midpoint for a billing coordinator is $55,000:

Minimum = $44,000
Maximum = $63,250

This structure allows flexibility in hiring and managing raises, while maintaining consistency and internal equity.

Need help managing pay rates across roles and departments? Explore Excelforce Payroll for compensation planning.

6. Consider Growth, Raises, and Internal Equity

Once salary bands are set, plan for how employees will move through them:

Are annual raises based on performance, tenure, or both?
What’s your budget for cost-of-living increases?
How will you ensure people in the same role aren’t unfairly spread across the range?

Clear guidelines reduce the risk of bias and legal exposure, especially as pay transparency laws become more common across states.

7. Review and Adjust Regularly

Salaries shouldn’t sit on autopilot. Review your salary structure at least once per year to account for:

Inflation
Minimum wage increases
Industry shifts
Business changes

Related Resource: How to Plan for Employee Raises

Why Salary Ranges Matter

Well-structured salary ranges:

Promote fairness and internal equity
Make budgeting more predictable
Improve employee retention
Help you stay legally compliant, especially in states with pay transparency laws

Most importantly, they show your employees that compensation isn’t arbitrary, but tied to role value, market data, and performance.

Need help structuring compensation policies for a growing team? Our HR Software centralizes everything from pay data to performance reviews.

Ready to Take the Next Step?

If you’re hiring, expanding, or just trying to stay competitive in 2025, Excelforce can help. From Recruitment and HR to Payroll Automation, our all-in-one platform makes compensation management easier and more accurate.

Frequently Asked Questions (FAQs)

What is a typical salary range structure?: A common approach is to build a 30% range around a midpoint. Employers often set the minimum at 80% of the midpoint and the maximum at 115% of the midpoint. This creates enough room for salary growth while maintaining consistency.
How often should salary ranges be updated?: Salary ranges should be reviewed at least annually. Adjust based on market trends, inflation, and evolving job responsibilities.
Why are salary ranges important?: They promote internal fairness, ensure market competitiveness, and help businesses comply with evolving pay transparency laws.
How can I make sure salary ranges stay competitive?: Use tools like the Bureau of Labor Statistics, industry surveys, and compensation platforms to compare pay levels across similar roles.
What’s the difference between salary range and salary band?: They’re often used interchangeably, but a salary band may apply to a group of related roles, while a range typically applies to a specific position.

©2025 - Content on this blog is intended to provide helpful, general information. Because laws and regulations evolve, please consult an HR professional or legal expert for guidance specific to your situation.