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Assume there is a 10% spread in salaries above and below the median across all jobs. For jobs at the lower end of the scale, say around 200 points where the median salary is about $40,000, a plus or minus 10% spread will give a range of plus or minus $4,000 (10% of $40,000). This will translate into an absolute spread of salaries from $40,000 minus $4,000 to $40,000 plus $4,000, i.e. from $36,000 to $44,000, a range of $8,000.

For a much larger job of say 1,000 points, the median salary is about $160,000. A 10% spread will give plus or minus $16,000, or an absolute range of $32,000. So we see that for the larger job the spread is much greater than for the smaller job, and hence the first and third quartile lines diverge with increasing job size.

4.0 Comparing Company Policy with the Market.

To identify where our sample company's salary policy stands relative to the market we overlay the company practice line on the market lines, as shown in Chart 5.

Chart 5

From Chart 5 we notice than the company practice is slightly above the market median for the smallest jobs. The company's position then deteriorates rapidly, ending up at the first quartile of the market for the biggest jobs.

We will now examine the steps for evaluating the cost of shifting the company's position relative to the market.

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