Every job description in your organization should come with an attached salary band—a range of salaries appropriate for the role. While there may be occasional deviations from this range for exceptional candidates, this assigned band is the standard pay for this position. This range should stick with your hires throughout their duration of employment in this position. Using that assigned range, you can calculate their salary range penetration—meaning, how far they are into their range.
Let’s say we’re talking about Alicia, who’s on track to get a raise in the next quarter. Go Alicia! Her position’s salary range is $90,000-$115,000, and she’s being paid $108,000 .(108,000 – 90,000) / (115,000 – 90,000) = .72, or 72%. This means that Alicia is 72% percent into her salary range, and has 28% left to go until she needs to have her position, or range, re-examined.
KPI Formula Salary Range Penetration (salary - range minimum) / (range maximum - range minimum) = range penetration.