Salary Structures and Pay Delivery

Using a Pay Range to Set Pay

Although employees may be paid anywhere within a defined range, they are typically hired between the minimum to the midpoint of the range depending on their knowledge, performance, and experience.

Employees new to the job may be started at or near the bottom of the range and move to the midpoint as they learn the job and become fully competent in their positions. A “fully competent, experienced” employee is paid at the midpoint over time, which is typically the competitive market rate. Payment above the midpoint is reserved for excellent performers or long-tenured, highly experienced employees.

Employee pay is not automatically adjusted when the salary structure is adjusted. The only exception is when employee pay falls below minimum. These employees are typically brought to minimum upon implementation of a salary structure. If a company does not make an adjustment to minimum upon implementation of the salary structure, this practice will increase compression issues.

Normally, employee pay moves through the salary range based upon merit, and merit pay is administered based upon performance. The midpoint represents pay for fully-experienced, competent performers. Although there is not one accurate length of time for how long it may take an employee to attain midpoint, many companies will set a goal of approximately three years for fully-experienced, competent performers.