How Wide Should Your Salary Ranges Be?

​​How wide should your salary ranges be? Like many questions in the world of compensation, it depends.

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Let’s take a look at some of the market benchmarks related to salary range widths and then zoom out for an analysis of how to make the right decision for your company.

Market Benchmarks for Salary Ranges

Which salary range widths do most companies adopt?

First, let’s explore the breakdown of which salary range widths companies most commonly adopt.

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For this analysis, the formula for determining a company's most common band width is (max-min)/mid. For example, the most common salary range width among analyzed companies is 30%, which means +/- 15% from the midpoint. So if the range is $85k to $115k, the formula would be: $115k - $85k = $30k, and $30k / $100k = 30%. 

• Narrowest: 20% (+/- 10%) Salary Range Width = 23% of analyzed companies
• 30% (+/- 15%) Salary Range Width = 38% of analyzed companies
• 40% (+/- 20%) Salary Range Width = 27% of analyzed companies
• Widest: 50% (+/- 25%) Salary Range Width = 8% of analyzed companies

How does a company’s salary range width impact range adherence? 

• Narrowest: 20% (+/- 10%) Salary Range Width = median of 66% of employees within range
• 30% (+/- 15%) Salary Range Width = median of 86% of employees within range
• 40% (+/- 20%) Salary Range Width = median of 90% of employees within range
• Widest: 50% (+/- 25%) Salary Range Width = median 93% of employees within range

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Choosing the Right Salary Range Width: Four Factors To Consider

Pay Equity Considerations

Wider ranges mean less control over potential pay parity issues, a topic that is becoming increasingly top-of-mind for companies with European offices in particular.

Performance Reward Flexibility

Wider ranges unlock more flexibility to reward top performers and give them room to grow within their current range without feeling the need to knee jerk a promotion as the main way to increase their comp once they approach the high end of a range. 

Pay Transparency Requirements

Wider ranges (for salary at least) ultimately will make their way into job descriptions (JDs) given the new legislative waves. There are pros and cons to consider from a candidate-facing comms and trust-building perspective as it pertains to wider ranges. 

Operational Management

There are pros and cons either way, but I’d generally suggest that wider ranges give you more wiggle room for special cases. Not to mention more congruence with pay grade style job architectures (e.g. lumping SWEs and AI/ML engineers together in the same job family). On the other hand, narrower ranges give you more control and precision over budget and cost forecasting.

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