How to Determine Salary Ranges That Work

Building salary ranges that actually work is more art than science. It's about finding that sweet spot where external market realities meet your company's internal values. You're trying to create a structure with a minimum, midpoint, and maximum that's fair, competitive, and doesn't break the bank. Get this foundation right, and you'll not only attract great marketing talent but also keep them around.

Establishing Your Compensation Foundation

Before you dive into spreadsheets and data points, you have to decide what you stand for when it comes to pay. This is your compensation philosophy, and it’s the guiding principle for every single salary decision you'll make. It answers the big question: "How do we want to pay our people, and why?"

Your philosophy will determine where you want to sit in the market. Are you going to:

• Lead the market? This means paying above average, targeting something like the 75th percentile, to land the absolute best talent in your field.
• Match the market? A common approach where you aim to be competitive by paying right around the market average, typically the 50th percentile.
• Lag the market? Some companies, especially early-stage startups, might offer lower base salaries but make up for it with significant equity, amazing benefits, or a mission people are dying to be a part of.

Having this philosophy clearly defined isn't just a "nice-to-have." It's essential for consistency and gives you a solid foundation when you have to explain pay decisions to your team or a new hire. You can find some great compensation philosophy examples to see how other companies have tackled this.

Gathering Accurate Market Data

Once your philosophy is set, it's time to hunt for data. This isn't just about a quick Google search for "marketing manager salary." You need reliable, high-quality data that mirrors your specific talent market—factoring in your industry, company size, and location.

There are a few different places you can look, and it's smart to use a mix of sources. Blending different data types gives you a much more complete and defensible picture of the market.

Here's a quick look at some key data sources for your benchmarking process.

Key Data Sources for Salary Benchmarking

Data Source Type	Primary Benefit	Potential Drawback	Best Used For
Traditional Surveys	Highly vetted, comprehensive data from established HR consulting firms.	Can be expensive and may not reflect the most recent market shifts.	Establishing a stable, long-term baseline for common roles.
Real-Time Data Platforms	Up-to-the-minute data, often aggregated from live HRIS and payroll systems.	Data quality can vary; may need careful filtering and validation.	Fast-moving tech and marketing roles where salaries change quickly.
Recruiter Insights	Real-world knowledge of what it takes to close candidates right now.	Can be anecdotal and biased toward recent placements.	Sanity-checking your data and understanding candidate expectations.
Public Filings/Job Postings	Increasingly available due to pay transparency laws; offers direct insight.	Often provides wide ranges and may not reflect the final offered salary.	Getting a general feel for the market and competitor positioning.

Ultimately, a robust strategy relies on multiple validated sources. Understanding this link between fair pay and talent retention is crucial. A deep dive into how you structure your compensation in employee retention is key to keeping your best people from walking out the door.

Understanding Global and Regional Trends

Your compensation strategy can't exist in a bubble. You need to keep an eye on the bigger economic picture that shapes what people expect to be paid. For example, global salary increase forecasts give you a heads-up on what a "standard" annual raise looks like.

For 2025, the global average salary increase is projected to be around 4.5%. This number shifts depending on where you are. In the United States, the forecast is closer to 3.7%, while Canada is at 3.6%. Meanwhile, several Latin American countries are seeing projections over 5% due to different economic climates.

Paying attention to these trends ensures your salary ranges aren't just competitive today but are built to adapt for what's coming next.

A well-researched compensation foundation does more than just set pay; it communicates your company's values, builds trust with your team, and creates a framework for equitable growth.

Creating Internal Equity with Job Leveling

Once you've got your hands on solid market data, the spotlight turns back to your own team. You can't just slap external numbers onto your internal structure without a bit of thought. That's where job leveling comes in—it’s the crucial process of building a fair and logical framework inside your company to figure out where everyone fits.

The whole point is to group similar jobs together and then create distinct tiers based on real-world factors like responsibility, skill level, and the impact someone has on the business. This isn't about job titles, which can be all over the place. It's about the actual work being done. When you get this right, you create clarity not just for pay, but for how people can grow their careers with you.

Start by Grouping Jobs into Families

First things first, you need to organize your roles into logical groups called job families. Think of these as clusters of jobs that share a common function but have different levels of responsibility. It's like organizing a bookshelf—you put all the design books in one section and all the engineering books in another.

For a marketing team, your job families might look something like this:

• Content Marketing: This would include everyone from a Content Coordinator all the way up to the Head of Content.
• Demand Generation: This family covers your paid media specialists, SEO pros, and email marketers, climbing up to a Director.
• Product Marketing: Here you’ll group the folks focused on go-to-market strategies and sales enablement.
• Brand & Communications: This is home to your social media, PR, and internal comms roles.

Grouping roles this way helps you compare apples to apples. It makes sure a Senior Content Writer is being measured against a similar framework as a Content Strategist—not a Senior Paid Media Specialist, whose market value and day-to-day skills are completely different.

Job leveling turns compensation from a messy, subjective conversation into a structured system. It ensures pay is tied to the actual scope and impact of the role, not just how long someone has been with the company or their negotiation skills.

Define Your Levels Across the Company

With your families set, the next move is to define the levels that will span across them. These levels create a consistent hierarchy for the whole organization, allowing you to see how a role in marketing compares to one in, say, finance. Each level needs a crystal-clear description that outlines what you expect in terms of skill, scope of work, and overall impact.

A pretty standard leveling structure might look like this:

1. Entry/Associate Level (L1): Follows set procedures and needs direct supervision. The focus is on learning the ropes and executing specific tasks.
2. Professional/Mid-Level (L2): Works independently on projects. They have solid functional skills and might start mentoring newer team members.
3. Senior Professional (L3): Takes the lead on complex projects. They're seen as a subject matter expert and often help shape how their team works.
4. Lead/Manager (L4): Manages people or major, cross-functional initiatives. They're on the hook for team outcomes and help shape the strategy.
5. Director/Senior Manager (L5): Leads an entire functional area and sets its strategic direction. Their work has a major impact on the business.

See, these aren't just titles; they're definitions of impact. A "Senior Product Marketing Manager" (L3) and a "Senior SEO Specialist" (L3) should carry a similar weight of influence and complexity, even though what they do every day is totally different.

Write Clear Level Descriptions That Actually Mean Something

The final piece of the puzzle is writing sharp, clear descriptions for each level. This is what makes the whole system tangible. Vague descriptions just create confusion, but specific ones give managers and employees a powerful tool to work with.

Let’s bring this to life with our marketing team example.

Example Marketing Levels

Level	Role Example	Scope & Impact Description
L1	Marketing Coordinator	Executes tasks with clear direction (e.g., schedules social media posts, pulls weekly reports). Impact is limited to assigned tasks.
L2	Digital Marketing Specialist	Manages a specific channel (e.g., runs Google Ads campaigns). Responsible for channel-specific KPIs and optimizes for performance.
L3	Senior Content Strategist	Develops and owns the content strategy for a product line. Influences team members and contributes to broader marketing goals.
L4	Demand Generation Manager	Manages a team of specialists and is accountable for the entire lead generation funnel. Sets team goals and manages the budget.
L5	Senior Director of Marketing	Leads the entire marketing function, sets the overarching strategy, and is accountable for marketing's contribution to company revenue.

Having a clear structure like this does more than just help you land on the right salary ranges. It gives your team a transparent roadmap for career growth. An L2 specialist can look at this and see exactly what skills and scope they need to develop to become an L3 senior pro, which makes conversations about career development and compensation feel much more objective and productive.

Turning Your Market Data into Real Salary Ranges

Once you’ve got your job levels defined, it’s time for the fun part: turning all that market research into a tangible salary structure. This is where your compensation philosophy meets the real world, translating data points into the actual numbers you’ll use to hire and retain top marketing talent. The math isn’t scary, but getting each step right is crucial for creating ranges that are both competitive and fair.

The whole process starts with an anchor point for each job level. Most companies shooting for a competitive edge will peg the midpoint of their salary range to the 50th percentile of their benchmark data. Think of the midpoint as the ideal salary for a fully-ramped, experienced pro who is crushing it in their role.

Finding Your Midpoint and Setting the Spread

The midpoint is your north star for every range you build. Let's say your market data shows the 50th percentile for a "Marketing Manager" is $100,000. That's your new midpoint. This number sends a clear signal that you're serious about paying market rate for the right talent at that level.

Next up is the range spread—the percentage difference from the bottom of the range (minimum) to the top (maximum). A one-size-fits-all approach doesn't work here. The spread needs to reflect the complexity and seniority of the job.

• Junior or Entry-Level Roles: You'll typically see a tighter spread, maybe 30-40%. These roles have a faster learning curve, and people tend to move through them more quickly.
• Senior or Leadership Roles: Here, you need a wider spread of 50% or more. These roles have a huge scope of responsibility, and a wider range allows for significant growth in skills and impact over a longer period.

For our Marketing Manager example, let's call it a mid-to-senior role and use a 40% spread. That gives us enough room to bring in promising candidates and reward our seasoned veterans.

The infographic below shows how this all connects back to the foundational work of job leveling you did earlier.

As you can see, organizing jobs into families and defining distinct levels is what creates the internal framework. Without it, you’d just be applying market data randomly.

The Math: Calculating Your Minimum and Maximum

With your midpoint and spread locked in, calculating the bookends of your range—the minimum and maximum—is pretty simple. These formulas keep your range perfectly balanced around that midpoint you worked so hard to define.

1. To find the Minimum: Midpoint / (1 + (Spread / 2))
2. To find the Maximum: Minimum * (1 + Spread)

Let’s plug in the numbers for our Marketing Manager:

• Midpoint: $100,000
• Spread: 40% (which is 0.40 in decimal form)

First, we get the minimum salary:
$100,000 / (1 + (0.40 / 2)) = $100,000 / 1.20 = **$83,333**

Now, we use that minimum to find the maximum:
$83,333 * (1 + 0.40) = $83,333 * 1.4 = **$116,666**

And there you have it. Our final salary range for the Marketing Manager role is $83,333 - $116,666.

To make it even clearer, here's the breakdown in a table.

Sample Salary Range Calculation for a Marketing Manager

This table walks through the exact calculations we just did, showing how each piece builds on the last to create a complete, data-backed salary range.

Component	Calculation/Formula	Example Value
Market Midpoint (50th Percentile)	From external benchmark data	$100,000
Range Spread	Based on job level/seniority	40%
Calculate Range Minimum	Midpoint / (1 + (Spread / 2))	$83,333
Calculate Range Maximum	Minimum * (1 + Spread)	$116,666
Final Salary Range	[Minimum] - [Maximum]	$83,333 - $116,666

Following this formula-based approach takes the guesswork and bias out of compensation. It gives you a consistent, repeatable method that makes your entire pay system defensible, fair, and much easier to explain.

Key Takeaway: A structured, formula-based approach removes guesswork and bias. It ensures that every salary range is built on a consistent methodology, making your compensation system defensible, fair, and easy to explain to both candidates and employees.

Of course, your data is only as good as the context you apply. Global wage data shows just how massive the gaps can be between markets. An entry-level role in a country like Australia might command around $61,000, whereas the minimum wage in a developing country like Myanmar can be as low as $78 per month. This is why you need granular, market-specific data, not just global averages.

Understanding these external factors is a huge part of figuring out what is a competitive salary in the specific markets where you're trying to hire.

From Spreadsheet to Reality: Validating and Refining Your Pay Structure

You’ve done the heavy lifting of pulling market data and building out your initial salary ranges. That’s a huge win, but the job isn't quite finished. A pay structure that looks great in a spreadsheet is just a theory until you test it against the people it will actually affect: your team.

This is the validation phase. It’s where you pressure-test your numbers against your current payroll to make sure the new system is financially sound, internally fair, and genuinely practical to roll out. Think of it as the final quality check that turns a strategic exercise into an actionable plan, protecting both your budget and your team's trust.

Using Compa-Ratios to Check for Internal Equity

One of the most effective tools for this reality check is the compa-ratio (short for comparative ratio). This simple metric shows you exactly where an employee's current salary sits within their newly proposed range. It’s a fast, data-driven way to spot potential pay equity issues at a glance.

The formula is easy:

Compa-Ratio = (Employee's Actual Salary / Salary Range Midpoint) * 100

If an employee’s compa-ratio is 100, they are paid exactly at the market midpoint. A ratio below 85 could be a red flag that they’re underpaid, while anything over 115 might mean they’re “red-circled,” or paid above their market range.

When you map out these ratios for your whole team, you start to see a story unfold. Are entire departments clustered at the bottom of their ranges? Do you have a few major outliers? This bird's-eye view is your first step toward making fair, consistent adjustments.

The goal isn’t to get everyone to a perfect 100 compa-ratio. It’s about ensuring a logical spread. You want to see performance, experience, and tenure reflected in where people fall within their range. The outliers are your call to action.

What’s This Going to Cost? Running a Financial Impact Analysis

Before you can even think about committing to a new pay structure, you have to know what it will cost. A financial impact analysis gives you the hard numbers by calculating the total expense of bringing all underpaid employees up to the minimum of their new salary ranges. This is a non-negotiable step for budgeting and getting your leadership team on board.

Here’s how you can run the numbers:

• Flag Underpaid Employees: First, make a list of every person whose current salary is below the new minimum for their job level.
• Calculate Each Gap: For each employee on that list, figure out the difference between their current pay and the new range minimum.
• Get Your Total: Add up all those gaps. This gives you the total investment required to make things right. Don't forget to factor in the corresponding bump in payroll taxes and any bonuses tied to base pay.

This analysis might reveal it will cost $75,000 to bring your entire marketing team up to their new minimums. Armed with that concrete figure, you can have a real conversation about the budget—deciding whether to make the changes all at once or phase them in over a couple of quarters.

Watch Out for Salary Compression

A brand-new pay structure can sometimes create an unintended side effect: salary compression. This is what happens when the pay gap between a veteran employee and a new hire—or between a manager and their direct report—shrinks so much that it feels unfair.

Imagine a Senior Marketing Specialist making $90,000 and their manager earning $95,000. That tiny $5,000 difference hardly seems to compensate for the manager's added stress and responsibilities. This is a classic morale killer and a major flight risk for your most tenured people.

As you validate your ranges, you have to actively hunt for these compression risks. Look at the pay differences between managers and the people they lead. Check the gaps between your senior individual contributors and the junior team members they mentor. If those gaps feel too tight, you’ll need to make targeted adjustments to reward that experience and leadership. This is a critical final check to ensure your new structure actually motivates people to grow.

Communicating Salary Changes with Confidence

You’ve done the heavy lifting—the research, the math, the internal equity checks. Now you have a fair, data-driven pay structure. But the work isn't over. In fact, the most delicate part is just beginning: sharing it with your team.

This is where your careful analysis becomes a real conversation. Getting this right is about much more than sending a company-wide email. It's about building trust and showing your people that your compensation strategy is designed to be fair for everyone. The goal is to turn a potentially sensitive topic into a moment that strengthens your company culture.

Navigating Pay Transparency Laws

The push for pay transparency is no longer just a trend; it's the law in a growing number of places. States and cities across the country now require salary ranges in job postings, and that legal framework is constantly expanding. Staying compliant isn’t just a good idea—it's mandatory, and it sets the foundation for how you talk about pay internally.

Failing to comply can lead to hefty fines and can seriously damage your employer brand. But more importantly, embracing these laws sends a powerful signal to current and future employees that you're committed to fairness. For a deeper dive, our guide on what is pay transparency breaks down the key principles and legal details you'll want to know.

Equipping Managers for Pay Conversations

Your managers are on the front lines of this rollout. You can have the best-designed pay structure in the world, but it can all fall apart with one poorly handled conversation. This makes manager training the single most critical piece of the puzzle.

They don't need to become compensation analysts overnight, but they absolutely need the confidence and empathy to handle tough questions. Your training should prepare them to:

• Explain the "Why": Managers have to be able to clearly walk through the company's compensation philosophy and the data-driven process you used to build the new ranges.
• Discuss an Employee's Position: They need to explain where an individual falls within their new range and what factors—like performance, skills, and experience—influenced that placement.
• Handle Difficult Questions: Arm them with talking points and a clear rationale for questions like, "Why am I not at the midpoint?" or "Why is my range lower than I expected?"
• Focus on Growth: Train them to connect these pay conversations to career development, showing employees a clear path forward within the new structure.

When managers can confidently explain the logic behind the numbers, these discussions shift from tense negotiations to productive dialogues about career growth.

A well-trained manager can transform a conversation about a paycheck into a meaningful discussion about an employee's value and future with the company. It's the human element that makes any compensation strategy truly successful.

Creating a Company-Wide Communication Plan

While your managers are having those crucial one-on-one meetings, you need a unified message for the entire organization. A clear, phased communication plan ensures everyone gets the same information and understands the context behind the changes.

I always recommend starting with an all-hands meeting or a detailed announcement from leadership. This is your chance to share the big picture: why the company invested in this project, the philosophy guiding your pay decisions, and your commitment to keeping the system fair.

It’s also important to ground your salary ranges in foundational benchmarks like minimum wage and median income. These standards vary wildly across the globe; for instance, the 2025 minimum wage in Luxembourg is $3,214 monthly, while in North Macedonia, it's just $366. South Korea's is about $1,570 monthly, compared to India's $64. These numbers set the absolute floor, while salary budget forecasts—like the expected 3.5% increases in the U.S. and Canada for 2026—provide context for future adjustments. You can discover more insights about 2025 salary budget planning on wtwco.com.

After the initial announcement, make resources easily accessible. A simple FAQ document or an internal webpage that employees can refer back to is a great idea. This documentation should clearly explain key terms like "midpoint" and "compa-ratio" and reinforce the core principles of your new structure. By being open and proactive, you show respect for your team and prove that your approach is thoughtful, consistent, and built to last.

Answering the Tough Questions About Salary Ranges

Even with the most carefully designed salary structure, you're going to run into tricky situations. That's just the nature of compensation. The key is to think through these common challenges ahead of time so you can handle them with confidence and consistency. Getting your answers straight from the beginning helps keep your system fair, competitive, and—just as importantly—easy to explain.

Let’s walk through some of the most frequent questions I hear when companies build out their salary ranges, along with some practical advice for each.

How Often Do We Need to Update Our Salary Ranges?

Think of your salary ranges as a living document, not a "set it and forget it" project. The market never stops moving, and neither can your pay structure.

As a general rule, you should plan for a light refresh every year. This usually just means applying a market movement adjustment to your entire structure—often somewhere between 2-4%—to keep up with inflation and overall wage growth. It's a simple way to stay current.

However, you'll want to do a much deeper dive every 18 to 24 months. This is where you pull fresh survey data and re-benchmark your key roles to make sure your midpoints are still tracking with the 50th percentile of the market. If you're in a highly competitive space like marketing or tech, you might even need to shorten that cycle to stay in the game.

What if an Employee Is Already Paid More Than Their New Range?

This happens more often than you'd think. You'll run your analysis and find an employee whose current salary is already above the maximum for their newly defined range. This person is often called a "red-circled" employee, and the absolute first rule is: you never reduce their pay. That's a surefire way to destroy morale and trust.

Instead, the standard approach is to freeze their base salary for the time being. You can still reward them for great performance, just in different ways:

• Lump-sum bonuses: Instead of a merit increase to their base pay, offer a one-time bonus.
• Variable pay: You could increase their bonus potential or introduce other performance-based incentives.
• Skill development: This is also a great time to look at their career path. Are they actually performing at the next level? They might be ready for a promotion into a role with a higher pay band that can easily accommodate their salary.

This approach lets the market ranges catch up to their salary over a few years, bringing them back into the band naturally without any negative impact.

Should We Pay Remote Employees the Same Regardless of Location?

This is easily one of the biggest compensation debates right now, and honestly, there's no single "right" answer. It all comes down to your company's core philosophy. Generally, I see companies take one of three paths:

1. Pay a single national rate: You have one salary range for each role, and it doesn't matter if the employee lives in San Francisco or St. Louis. This approach is simple and champions internal equity, but it can get expensive fast.
2. Use location-based differentials: This is the most common method by far. You group locations into geographic tiers (e.g., Tier A for high-cost-of-labor cities, Tier B for mid-cost areas, Tier C for lower-cost regions) and adjust the ranges for each tier.
3. Pay local market rates: This is the most precise strategy, where you benchmark pay for every specific location. It's incredibly accurate but also a massive administrative lift.

Whichever direction you go, the most important thing is to be consistent and completely transparent about why you chose that approach.

Key Insight: Your geographic pay strategy is less about a right or wrong answer and more about what aligns with your company's values. Are you optimizing for internal consistency or for precise market alignment? Your answer to that question will point you in the right direction.

How Transparent Should We Be with Our Salary Ranges?

Pay transparency isn't a fad; it's quickly becoming the standard. This shift is being pushed by new legislation and a fundamental change in what employees expect from their employers. A 2024 survey showed that a staggering 82% of employees see pay transparency as a critical factor when looking for a new job.

At the very least, you have to comply with any state or local laws that require putting ranges in your job postings. But beyond legal requirements, a fantastic practice is to share an employee's specific salary range with them directly, maybe during their annual review. It builds an incredible amount of trust.

Going for full transparency—publishing all salary ranges for all roles internally—is a bigger step. It can create a powerful culture of fairness, but it demands that you have an exceptionally well-built and equitable system that you're prepared to stand behind and explain.

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Ready to stop guessing and start building data-driven salary ranges? SalaryGuide provides the real-time marketing compensation data and workforce analytics you need. Our interactive dashboards make it easy to benchmark roles, understand market trends, and create a pay structure that attracts and retains top talent. Explore SalaryGuide's tools for employers and build with confidence.