Midpoint differentials - for those of you who don't eat, drink and sleep compensation - are the jumps between salary range midpoints as you work your way up a traditional salary range structure. I favor midpoint differentials that follow a consistent and logical pattern. But I regularly encounter salary structures where the midpoint differentials look as though they came from a random number generator. The tables below show examples to illustrate the difference.
In many cases this chaos happens unintentionally over time, when salary ranges are added or tweaked on an isolated basis in order to address particular pay situations.
In other cases, the uneven midpoint differences are actually created on purpose, the results of an initial design decision to create midpoints for groups of jobs clustered by current value (whether that be a market or internally generated value such as job evaluation points). Although some consultants and compensation books do advocate tailoring structures and midpoint differences around job group values in this way, this approach is ultimately problematic in the real world where, over time and often even within the first year of the program, these job groupings will change as jobs are added, eliminated or altered in content and value. In today's fluid labor market, it strikes me as silly to take a snapshot of current job inter-relationships and create a "permanent" structure which precisely reflects this, as if things were going to move in lock-step forever forward from this point. How many organizations today operate in that kind of static environment?
Why - regardless of how it came to be - does it matter that midpoint differentials are inconsistent?
It matters because inconsistent midpoint differentials play havoc with an organization's attempts to manage promotions, job re-evaluations and/or job upgrades in an equitable and consistent manner. If a one-grade promotion means a 5% increase in job value in some cases, and a 23% increase in job value in other cases, it is difficult to conceive and manage salary treatment guidelines that address each situation in a fair manner. The same holds true for job re-evaluations or upgrades. It might be easier to defend upgrading a job in a situation where moving up entails only a 5% difference in value versus the situation where a grade change entails a 23% leap, making it difficult to handle these decisions in an equitable way.
At the end of the day, screwy midpoint differentials create the conditions for screwy salary administration. Who can afford that in today's litigious, discrimination-wary world of work?
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