Today I am calculating location specific base salary ranges in 5% increments for an employer client. They use ranges that go from National up to 25% and down to -35%.

What are the range spreads? 36% - 60%

Here is my question: What do you think about using one set of pay grades and base salary ranges based on National data? (This employer has all employees working in the U.S.)

In other words, you ignore the location an employee is working in. Everyone performing the same job has their base pay determined with reference to the same base salary range.

So, if you have an Accountant working in Wamego, Kansas, and another working in San Francisco, California, they are going to be paid within the same range.

Love it or hate it?

I’ll point out the obvious.

1)    Yes, you will have to pay more to the Accountant in San Francisco than the one in Wamego. Yes, the range spread will have to be broad enough to accommodate the differences in cost of labor across your workforce.

2)    Yes, you could build the one set of base pay ranges on the city/state with the highest cost of labor of all your employees instead of using National data.

3)    Yes, you could possibly be paying more than necessary for employees performing work in lower cost of labor locations with this approach.

4)    The trade off is simplicity. One set of base pay ranges to reference. One set of base pay ranges for use on job postings so consistency in your posting of salary ranges would be the result. One set of ranges to load into your HR system.

Thoughts?

#compensation #rewards #geodifferentials #humanresources #payequity #paytransparency #jobposting