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Notice that even though the incumbent of Job B moved down in their salary range from 111% to 105%, their salary still goes up, carried forward by the upward movement of the company policy line for the higher level jobs. For Job A, where the incumbent's position in their salary range stayed static there is still a substantial increase in salary because of the large upward movement of the company policy line for the higher level jobs. On the other hand Job E, also with no change in compa-ratio experiences virtually no movement, because at that level the company's policy line is already very close to the market median. Finally, consider Job F. There a large increase in performance assessment only results in a small increase in salary. This is because at this level of job the company's policy was higher than the median of the market. The salary range for the lower level jobs needed to be reduced to align them with the market median.

What if the 6.5% increase to achieve this objective is outside the budget allocation for the salary review? First and foremost the compa-ratios, which represent a measure of the incumbents' performance should not be tinkered with. In this case the company's policy line cannot be set as high as the median of the market. Various policy positions, somewhere between the company's current practice position and the market median will need to be tested until a position is reached that absorbs the allocated budget increase.

What if the 6.5% increase to achieve this objective is less than the budget allocation for the salary review? If it is the organisation's desire to fully distribute the budget allocation then a position in the market higher than the median can be achieved. Here again, compa-ratios should not be tinkered with. Instead, various policy positions above the market median will need to be costed until a position is reached that absorbs the allocated budget increase.

6.0 Setting salary ranges.

Once a policy position has been established, the salary practice line thus set determines the mid-point or fully competent level of pay for all jobs covered by the practice.

As per the examples presented in this paper, assume that our sample company adopts the market median as their policy. Their salary practice line then becomes:

Salary = Job Points x $150.38 + $10,918

From this formula the mid-point salary (fully competent incumbent salary) for any job size can be calculated. For example if the job points are 300 then the midpoint salary is:

300 x $150.38 + $10,918

Which equals $56,032

The salary range for this and all other jobs determined by this policy is the job's mid-point salary, plus or minus, say 20% (individual organisations may adopt a different percentage).

The salary ranges for jobs in the organisation are therefore related to the organisation's policy line mid-point salary, not to any spread of market data.

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