Base Salary Program Design

Base salary program design involves developing base salary ranges for all (or a subset) of positions. This is separate and distinct from Salary Administration which refers to the way ranges are used after they have been created. Click here to view a description of our Salary Administration practice.

There are numerous techniques and methodologies for establishing base salary ranges:

  • Point factor systems
  • Factor comparison systems
  • Whole job ranking
  • Market pricing

Each has its own benefits and drawbacks, and we are experience practitioners in them all. But our preference gravitates toward market pricing. We find this approach the most simple, flexible, relevant, and easily understood. And it produces ranges which are market competitive and fully reflect both the external market and internal equity. We are expert at developing automated tools to help you create salary ranges which incorporate all relevant factors. These tools can be highly useful in complex organizations with numerous geographic locations.

One of the most common (and least understood) aspects of Base Salary Program Design are salary grades. Each job can have its own separate and distinct range tied directly to the market for that job, or you can group multiple similar jobs into the same range. When you do the latter, you are creating salary grades. The decision of whether or not to create grades has far-reaching consequences. It can dramatically affect the ease of program administration, communication, and cost. We will work with you do develop a base salary program that best fits your organization by helping you decide:

  • Which organizations you should compare yourself to
  • The best source(s) for acquiring this data
  • How your jobs compare to survey benchmarks
  • Whether or not geographic differentials are required or beneficial
  • Where to set your salary ranges midpoints relative to your competition (e.g., median, P75)
  • The appropriate number of ranges or grades
  • The appropriate spread between ranges or grades
  • The appropriate range width between minimum and maximum
  • Which jobs go into each grade (if you use grades)
  • Linkages between benchmark and non-benchmark positions

​Before implementing new ranges, we test for compression between midpoints and headroom between managers and their direct reports. Finally, we develop a strategy for transitioning employees to their new range, and publish guidelines for on-going program administration.