What is a salary range?

A salary range refers to a defined span of compensation for a specific position within an organization, encompassing both the minimum and maximum pay levels. This framework allows employers to establish fair and competitive pay structures by defining the lower limit, which represents the starting salary for entry-level employees or less experienced workers, and the upper limit, which reflects the highest salary for highly experienced or top-performing employees in that role.

Salary ranges are essential for several reasons. They help organizations maintain internal equity, ensuring that employees in similar roles with comparable experience and performance levels are compensated fairly. Additionally, salary ranges support external competitiveness by allowing employers to align their compensation packages with prevailing market rates, attracting and retaining talent effectively.

By having a range rather than a fixed amount, organizations can offer flexibility in salary negotiations based on individual qualifications, experience, and performance, which helps in catering to a diverse talent pool.

In contrast, the other options do not accurately define a salary range. A fixed annual salary amount specifies one particular figure without acknowledging any variation, and an average of salaries across the industry does not establish the payment benchmarks relevant to specific positions. Lastly, a method for calculating bonuses relates to incentive compensation rather than base salary structure, which is distinct from salary ranges.