A tool used in human resources management determines the relationship between an individual’s salary and the midpoint of a defined salary range for their position. For example, if the midpoint of a salary range is $50,000 and an employee earns $45,000, the tool would calculate a specific percentage representing their position within that range.
This analytical instrument offers valuable insights for organizations. It aids in assessing internal pay equity and ensuring fair compensation practices. By analyzing these relationships across departments and roles, organizations can identify potential discrepancies and maintain competitive compensation structures. Historically, manual calculations were prevalent, but modern software and online tools now streamline this process, offering increased efficiency and accuracy. This allows for more proactive salary management and facilitates data-driven decisions related to compensation adjustments and budgeting.