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Range information can be useful, but it has limited utility outside the reporting enterprise. It gives a glimpse of the organization's internal value structure. It also may indicate whether the rates paid to incumbents (the weighted averages and median salaries) in a particular job or grade reflect a special employee demographic: dominated by veteran long-service workers, or all new hires.

Unfortunately, most of the variables that affect grade classification and range position are not reported in surveys, so the outside observer has no way of knowing most of them. For example, if the individual surveyed companies have forty grades or five broad bands; frequently the organizational levels and numbers of incumbents in each reporting firm are masked, too: such differences really mess up the implications of grade-range summaries.

But ranges do indicate market threshold levels (minimum entry rates below which adequate talent is not anticipated to be attracted) and maximum values set for groups of jobs. The first is an extremely valuable metric generally representative of the general local market, while the second is company-specific and has doubtful relevance to others because it communicates nothing about career ladders, progression plans, promotional ladders, cash-bonuses and such. Furthermore, you still won't know if the firm has a deliberately high or low pay structure, if they utilize shadow ranges, if they are about to completely revise their decades-old "failed" grade-range programs, or if they make exceptions to their "boundaries" every day.

The more information shared the better, I say. People will always misunderstand facts, don't get upset about that. The copycats will consistently remain behind the leaders (who lead rather than follow). Followers wait for others to make their policies for them and imitate, while remaining ignorant of the motivations or purposes that inspired those practices elsewhere. Grades and ranges reflect those intentions, which can be quite different from the actual salaries paid.

Couple of thoughts...

1. Pay ranges can be used as a check point for what you've set up. Meaning - rate the job - and the impact on the company - set a salary/pay range as it relates to your company THEN check the "prevailing winds." Every company values different jobs differently. Just because everyone else thinks Accountants should be paid a lot doesn't mean accounting is something your firm values as much. However, you want some way to validate your thinking and ranges can give you some of that.

2. Pay ranges create an anchor point. Good or bad... people will ue that as the starting point for discussion. If the data you are using is flawed in someway - too bad - the anchor has been set. See this post on my site about how Chris Brogan created an anchor point for his services in the social media world.



Agree that, with the advantage of an internal perspective, ranges do provide valuable information. Unfortunately, as they are reported in most surveys, I think there are too many "unknowables" to allow us to pull much genuine value from them. Unfortunately, the presence, weight and impact of the unknowables doesn't give some people pause. Particularly those who merely copy and past these figures from the survey and - presto! - they have a salary range structure.

Don't get upset about people misunderstanding the facts? Come on, Jim - you know me much better than that....


Totally right on about pay ranges as an anchor point - and thanks for the link illustrating the application of this concept (a core principle for compensation management) to the social media world.

I don't mean at all to argue against pay ranges and their importance. In fact, it is my strong believe in pay ranges, and their importance as anchor points, that leads me to object to their reporting in salary surveys in the first place. I believe that survey users should focus more on actual pay data (median, mean, etc.), which is the more meaningful and valid information available in those studies, and do the hard work of determining how they should construct their own anchors around these data points. Rather than just lifting the "average reported anchor points" out of the survey - which are imperfectly represented at best - and putting them in place without thought or consideration.

(...Now jotting down some notes about "anchor points" and their importance to use in the next debate with a would-be client...)

Thanks for weighing in!

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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