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Then they take all the employee salary information and figure out the range of salaries being earned by employees doing jobs in that bucket. Then your HR department, based on executive decision, decides what percentile they want to pay salaries at.
Salary range generally has a minimum pay rate, a maximum pay rate, and a series of mid-range opportunities for pay increases. The salary range is determined by market pay rates, established through market pay studies, for people doing similar work in similar industries in the same region of the country.
According to most economics textbooks, our wages are determined just like any other price: by supply and demand. People supply their labor, and companies demand it, creating a market for labor. In broad strokes, the standard theory is pretty straightforward.
The pay grade is generally defined by the level of the responsibilities performed within the job description of the position, the authority exercised by the position, and the length of time the employee has performed the job.
Being able to negotiate salaries effectively and professionally is one of the key skills of an HR manager. It can be the determining factor for a candidate whether to accept an offer or not and whether you as an HR can keep the salary within budget.
DO familiarize yourself with industry salary trends. DON'T fail to build your case. DON'T stretch the truth. DO factor in non-salary benefits. DON'T wing it. DO know when to wrap it up. DON'T forget to get everything in writing. DON'T make it only about you.
HR normally has little latitude in negotiating salaries on their own. They are not normally qualified to evaluate whether a particular candidate is worth more than was offered. The hiring manager should be aware of what you are worth to fill the role and whether they are willing to go higher.
Anonymously ask your HR questions here. A: Asking your supervisor for a raise might be the easy part. HR should be able to help you. Keep in mind, there often are legitimate reasons for pay differences among peers experience, performance, education, skills and how the salary was negotiated at the time of hire.
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