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Salary Range Penetration Formula:
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Salary range penetration is a metric that shows where an employee's current salary falls within their established pay range. It's expressed as a percentage that indicates how far the salary has progressed through the range from minimum to maximum.
The calculator uses the salary range penetration formula:
Where:
Explanation: This calculation shows what percentage of the range the employee's salary represents, with 0% being at the minimum and 100% being at the maximum of the range.
Details: Salary range penetration helps organizations ensure pay equity, make informed compensation decisions, identify potential pay compression issues, and maintain competitive compensation structures that align with market rates.
Tips: Enter the employee's current salary, the minimum of their salary range, and the maximum of their salary range. All values should be in the same currency. Range Max must be greater than Range Min, and Salary should fall within the range.
Q1: What does a 50% penetration mean?
A: A 50% penetration means the employee's salary is exactly halfway between the minimum and maximum of their salary range.
Q2: What is considered a good penetration percentage?
A: This varies by organization, but typically 40-60% is considered mid-range, while values above 80% may indicate an employee is approaching the maximum of their range.
Q3: How often should penetration be calculated?
A: It's typically calculated during annual compensation reviews, promotion considerations, or when making salary adjustments.
Q4: What if the salary is below the range minimum?
A: This calculator assumes salary is within the range. If salary is below minimum, it may indicate a need for a salary adjustment to bring the employee to at least the minimum of their range.
Q5: How does this relate to compa-ratio?
A: Compa-ratio compares salary to range midpoint, while penetration shows position within the entire range. Both are useful compensation metrics that provide different perspectives.