The salary midpoint is the middle point of a salary range’s minimum and maximum. The salary midpoint should represent a fair and competitive salary based on market pay levels, and should indicate your internal salary progression for individual employees is reasonable and promotes pay equity.
What does it mean to be paid at the salary midpoint? How is the salary midpoint formula is calculated? Why is salary midpoint important? How does the midpoint formula impact the salary midpoint differential? We’ll answer all these questions
What Does Being Paid at the Salary Midpoint Mean?
A salary range, or grade, encompasses the minimum, midpoint, and maximum rates that a business is willing to pay for a job within the range. The minimum and maximum rates typically represent entry-level and highly experienced employees within a pay range.
Many employers develop and start new hires below the salary midpoint. This practice gives employees an opportunity to grow in their profession, and within their pay range. An offer lower than the salary midpoint doesn’t mean that the employee in the role isn’t fully functional. It is important an initial job offer is as close to the midpoint as possible so it can be enticing and competitive, and offer the employee room to grow and receive a merit increase without creating salary compression.
How Do You Calculate the Midpoint of a Salary Range?
To calculate the salary midpoint formula, take the sum of the range’s minimum and maximum and divide the sum by two. That will give you the midpoint for your range.