Sample Pay Range Utilization Analysis

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Document Header

Field	Value
Document Title	Pay Range Utilization Analysis - <Company Name>
Document Type	Pay Range Utilization Analysis
Category	Base Compensation
Version	v<Number>.<Number>
Effective Date	<Date>
Last Review Date	<Date>
Next Scheduled Review	<Date> (typically 12 months after Effective Date)
Document Owner	<Owner Name/Title> (e.g., Director, Total Rewards)
Document Approver(s)	<Approver Titles> (e.g., CHRO, CFO)
Applicability	<Company Name> employees in <Country/Regions>
Confidentiality	Internal Use Only
Related Policies	Base Pay Policy, Job Architecture, Pay Transparency & Communication Guidelines, Annual Compensation Cycle Policy

Change Log

Version	Date	Summary of Changes	Author	Approver
v<Number>.<Number>	<Date>	Initial release	<Author Name>	<Approver Name>
v<Number>.<Number>	<Date>	Updated methodology and thresholds	<Author Name>	<Approver Name>

Purpose and Objectives

• Provide a standardized method to assess how employees’ base pay is positioned within their respective pay ranges and structures at <Company Name>.
• Identify risks and opportunities related to market competitiveness, internal equity, compliance, and budget allocation.
• Inform annual compensation planning, pay transparency communications, and workforce decisions such as promotions, transfers, and retention actions.
• Establish common definitions, metrics, and thresholds for pay range utilization, compa-ratio, and related indicators.
• Enable consistent, auditable, and repeatable analysis across business units, functions, and regions.

Scope and Applicability

In Scope

• Regular employees (full-time and part-time) with a mapped job profile and an assigned grade or level with defined pay ranges.
• Base salary analysis using currency-normalized values for multi-country comparisons, where appropriate.
• Pay range structures including global, regional, or country-specific ranges with geo-differentials.
• Analysis at the individual, job profile, grade, function, division, and region levels.
• Integration with annual merit, promotion, and market adjustment cycles.

Out of Scope

• Variable pay (bonus, commission, sales incentives) and equity awards, except where referenced for context.
• Contingent workers, interns, and apprentices unless explicitly assigned to a graded pay range.
• Legal conclusions or pay equity determinations. This analysis may inform such reviews but is not a substitute for formal pay equity audits.
• Countries or entities without established, approved pay ranges.

Applicability

• Applies to <Company Name> employees in <Country/Regions> where pay ranges have been formally approved by <Date>.
• For unionized populations, apply per collective bargaining agreements and local works council requirements.

Key Principles

• Market competitiveness is assessed against the approved reference market(s) and sources (e.g., <Vendor Name> surveys).
• Internal equity and pay progression are guided by job architecture, job level expectations, and performance.
• Decisions must align with budget constraints, governance thresholds, and compliance obligations in each jurisdiction.
• Transparency and consistency are prioritized, with communications calibrated to local legal requirements.

Definitions and Core Metrics

Core Metrics

• Compa-Ratio = Employee Base Pay ÷ Range Midpoint
  • Example: If base pay is <Amount> and midpoint is <Amount>, compa-ratio = <Percentage>.
• Range Penetration (Range Positioning) = (Employee Base Pay − Range Minimum) ÷ (Range Maximum − Range Minimum)
  • Expressed as a percentage from 0 percent (range minimum) to 100 percent (range maximum).
• Range Utilization = Proportion of the pay range used by current population. Can be analyzed by employee, job family, grade, and function.
• Red-Circled = Base pay above range maximum.
• Green-Circled = Base pay below range minimum.
• Midpoint Differential = Percentage difference between midpoints of adjacent grades.
• Range Spread = (Max − Min) ÷ Min.

Recommended Thresholds and Interpretation

• Compa-ratio bands commonly used:
  • Below 85 percent: Potential under-market or early-in-role placement
  • 85 percent to 100 percent: Developing-to-market
  • 100 percent to 115 percent: Market-to-seasoned
  • Above 115 percent: Potential over-market or premium skills
• Range penetration interpretation:
  • 0 percent to 25 percent: Early career or new-to-role
  • 25 percent to 75 percent: Competent to strong-in-role
  • 75 percent to 100 percent: Highly seasoned or pre-promotion
  • Above 100 percent: Red-circled

Note: Thresholds should be validated for <Company Name> based on compensation philosophy, grade spans, and local norms.

Data Requirements and Sources

Required Data Elements

Data Element	Description	Source System	Example
Employee ID	Unique identifier	HRIS (<System Name>)	E<Number>
Employee Status	Active, Leave, etc.	HRIS	Active
Country/Location	Country and geo zone	HRIS	<Country> / <Geo Zone>
Job Profile	Standard job name	HRIS	<Job Profile>
Grade/Level	Job level or band	HRIS	<Grade>
Base Salary	Annualized local currency	HRIS/Payroll	<Amount>
Currency	Local currency code	HRIS	<Currency>
Range Min/Mid/Max	Approved range points	Comp Admin Tool	<Amount> / <Amount> / <Amount>
FTE Percent	For part-time normalization	HRIS	<Percentage>
Hire Date/Time in Role	Tenure signals	HRIS	<Date>
Performance/Ratings	As available	Performance System	<Rating Scale>
Gender, Ethnicity, etc.	Where legally permissible and appropriately safeguarded	HRIS	<Attribute>
Union/Non-Union	CBA applicability	HRIS	<Value>

Data Quality Checks

• Validate that all in-scope employees have assigned grade and range values.
• Confirm currency conversions for multi-country analytics using FX rate date of <Date> or average rates during <Period>.
• Exclude pay elements not part of base salary (e.g., allowances) unless defined in local base pay rules.
• Reconcile employee counts across HRIS and compensation systems within ±<Percentage> variance.

Methodology

Step-by-Step Analysis Process

1. Define scope by population, geography, and effective date (e.g., employees active as of <Date>).
2. Extract data from HRIS and compensation systems; standardize fields and convert to analysis currency if required.
3. Calculate compa-ratio and range penetration for each employee.
4. Flag green-circled and red-circled employees.
5. Aggregate metrics by grade, function, job family, location, and manager to identify patterns.
6. Compare to internal targets (e.g., target compa-ratio distribution by grade).
7. Overlay performance, tenure, critical skill indicators, and turnover risk to refine insights.
8. Identify compliance exposures (e.g., below-minimum in jurisdictions with wage floors).
9. Recommend actions with budget implications and prioritize by risk and impact.
10. Review findings with HRBPs, Finance, and Legal prior to finalization.
11. Incorporate actions into annual merit, promotion, and off-cycle adjustment planning.

Formulas and Example

Employee	Grade	Range Min	Midpoint	Range Max	Base Pay	Compa-Ratio	Range Penetration
A	<G7>	60,000	75,000	90,000	63,000	84.0 percent	15.0 percent
B	<G7>	60,000	75,000	90,000	82,500	110.0 percent	75.0 percent
C	<G8>	80,000	100,000	120,000	126,000	126.0 percent	115.0 percent (Red)
D	<G6>	45,000	55,000	65,000	42,000	76.4 percent	-15.0 percent (Green)

• Compa-Ratio = Base Pay ÷ Midpoint
• Range Penetration = (Base Pay − Min) ÷ (Max − Min)

Note: Negative range penetration indicates below minimum. Values above 100 percent indicate above maximum.

Utilization Distribution Targets

• Suggested target distributions by grade:
  • 10 percent to 20 percent in the first quartile
  • 40 percent to 50 percent in the middle quartiles
  • 10 percent to 20 percent in the fourth quartile
  • Less than 5 percent red-circled; less than 2 percent green-circled outside of limited, time-bound cases

Pay Structure Context

Job Architecture Alignment

• Each job profile must map to a grade with approved min/mid/max reflecting market data aged to <Date> using <Percentage> annual movement.
• Midpoint differentials typically range from 8 percent to 12 percent between adjacent grades; wider gaps may be justified for managerial ladders or specialized roles.

Range Design Guidelines

• For professional grades: typical spreads of 40 percent to 50 percent.
• For managerial/executive: 50 percent to 80 percent spreads.
• Local statutory minimums and collective agreements override internal minimums where higher.

Geo-Differentials

• Apply geographic adjustments by labor market (e.g., Tier 1 +<Percentage>, Tier 2 baseline, Tier 3 −<Percentage>).
• Maintain a matrix of base ranges by geo zone; avoid informal off-range offers that erode structure integrity.

Analytical Lenses and Diagnostics

Individual-Level Flags

• Green-circled: below range minimum; diagnose job match accuracy, tenure, and onboarding stage.
• Red-circled: above range maximum; verify legacy adjustments, acquisition harmonization, or pay protection rules.
• High compa-ratio with low tenure: potential mis-leveling or data error.

Team/Manager Patterns

• Concentrations of red-circled employees under one manager may signal range misalignment or inconsistent practices.
• Excessive clustering at the range minimum can indicate constrained budgets or hiring below market.

Grade and Function Views

• Compare median compa-ratio by grade against target market position (e.g., at midpoint or at <Percentage> of market).
• Review utilization by job family to identify where market re-pricing is needed.

Equity and Compliance Overlay

• Where legally permissible, assess distribution of compa-ratio and range penetration across protected classes in aggregate.
• Consult Legal before using sensitive attributes and ensure proper safeguards, approvals, and minimization practices.

Action Planning and Thresholds

Recommended Actions by Condition

• Green-circled employees
  • Confirm job match, grade, and location range assignment.
  • Consider immediate adjustment to minimum or staged increases over <Number> pay periods.
  • Communicate rationale and plan timelines.
• Red-circled employees
  • Freeze base pay or provide lump-sum in lieu of base increases until range catches up.
  • Re-evaluate job level; consider promotion if duties align with higher grade.
  • If legacy pay protection applies, document sunset terms by <Date>.
• Low penetration with long tenure (e.g., under 40 percent with greater than 3 years)
  • Evaluate market adjustments, skill development, or promotion readiness.
• High penetration with low performance
  • Consider slower movement through the range and targeted development plans.
• Structural misalignment
  • Re-price ranges using current market data from <Vendor Name>.
  • Adjust midpoint or spread; document rationale and effective date.

Budgeting Guidelines

• Reserve <Percentage> to <Percentage> of the merit budget for structural adjustments (green-circled, market, corrections).
• Cap off-cycle market adjustments at <Amount> or <Percentage> per fiscal year unless approved by the CHRO and CFO.
• Prioritize adjustments with highest risk impact (compliance, retention, critical roles).

Integration with Annual Compensation Cycle

Pre-Cycle Diagnostics (T−90 to T−60 days)

1. Refresh market data and update ranges effective <Date>.
2. Run utilization analysis and identify hot spots.
3. Align with Finance on available budgets and guardrails.

Cycle Inputs (T−30 to T−1 days)

1. Provide managers with current compa-ratio, range penetration, and recommended increase guidance.
2. Establish system validations to prevent below-min and above-max entries without approval.
3. Flag employees requiring structural adjustments.

Post-Cycle Review (T+30 days)

1. Re-run analysis to confirm improvements in green and red incidence.
2. Document exceptions and approvals.
3. Update dashboards and prepare communications for transparency reporting, where required.

Roles and Responsibilities

• Total Rewards
  • Own methodology, metrics, and analysis cadence.
  • Maintain pay ranges and geo-differentials; coordinate market data refresh with <Vendor Name>.
  • Produce dashboards and executive summaries; recommend actions.
• HR Business Partners
  • Provide business context; validate job matches and exceptions.
  • Coach managers on decisions consistent with philosophy and ranges.
• Finance
  • Validate budget implications; align on forecasting and accruals.
• Legal/Compliance
  • Review for statutory and regulatory compliance, including pay transparency disclosures and wage floor adherence.
• HRIS/People Analytics
  • Ensure data integrity, secure extracts, and system validations during the comp cycle.
• Line Managers
  • Make pay decisions within guidelines, document justifications, and communicate thoughtfully to employees.
• Executive Sponsors (CHRO/CFO)
  • Approve methodology, thresholds, and out-of-guideline decisions.

Implementation Guidelines

Timeline and Milestones

1. T−120: Confirm market data sources, age factors, and target market position for <Fiscal Year>.
2. T−90: Update ranges; obtain HRLT approval; publish effective <Date>.
3. T−75: Complete initial utilization run; produce heat maps and findings.
4. T−60: Review with HRBPs and Finance; finalize thresholds and budget carve-outs.
5. T−45: Configure comp system validations; lock eligibility files.
6. T−30: Release manager dashboards; deliver training.
7. T: Launch comp cycle.
8. T+30: Post-cycle analysis; finalize action log and audit trail.

Tools and Artifacts

• Standardized extract specification for HRIS and compensation systems.
• Analysis workbook with predefined calc fields and pivot summaries.
• Dashboard by grade, function, and geography with filters for manager tree and diversity attributes where permitted.
• Exception log with reason codes and approval fields.

Risk, Compliance, and Controls

Legal Considerations

• Adhere to pay transparency laws in <Country/Region> including disclosure and posting requirements.
• Ensure base pay is above statutory minimums and complies with equal pay for equal work standards.
• Avoid using protected characteristics in decision-making; where aggregate analysis is permitted, involve Legal and ensure robust privacy protections.

Internal Controls

• Document approvals for any below-min or above-max pay actions with justification codes.
• Maintain audit logs for data extracts, calculations, and manager decisions.
• Restrict sensitive fields to authorized personnel; apply data minimization and retention rules per <Policy Name>.

Data Privacy

• Process personal data under lawful basis identified by <Company Name> privacy policy.
• Store analysis files in approved secure repositories; retain for <Number> years or as required by law.

Reporting and Dashboards

Standard Deliverables

• Executive summary of range utilization with trends over <Period>.
• Heat map of compa-ratio by grade and function.
• Incidence rates for green/red-circled employees with remediation plans.
• Pay distribution vs. targets, including quartile placement.

Sample Summary Table

Metric	Companywide	Target
Green-Circled Incidence	2.4 percent	Less than 2.0 percent
Red-Circled Incidence	3.1 percent	Less than 3.0 percent
Median Compa-Ratio	98.5 percent	100.0 percent
P75 Range Penetration	72.0 percent	70.0 percent to 75.0 percent

Decision Rules and Escalations

Standard Rules

• Managers may increase pay within range according to guidance without additional approval if within budget and policy.
• Any pay set below minimum or above maximum requires prior approval from Total Rewards and HRBP; red-circled outcomes require CHRO approval.
• Promotions require verification of job level and market target; minimum promotional increase of <Percentage> unless placing at new range minimum achieves higher value.

Escalation Path

1. Manager
2. HRBP
3. Total Rewards
4. CHRO and CFO (for exceptions)

Multi-Country Considerations

• Align analysis currency to <Currency> using FX rates from <Vendor Name> as of <Date>; also maintain local currency views for manager communications.
• Respect local disclosure requirements; in some jurisdictions, employees have the right to request pay range information.
• Account for 13th/14th month salary conventions where applicable to avoid misinterpretation of annualized base.

Special Populations

• New Hires within <Number> months may temporarily be below minimum if permitted by local law and approved with a documented development plan and timeline to reach minimum.
• Sales roles with draw or guaranteed commission: analyze base pay excluding variable target pay; compare to sales-specific base ranges.
• Acquired employees with legacy pay protections: document sunset periods and harmonization plans; disclose to works councils where required.

Review and Approval Process

Annual Review Cadence

1. Methodology review by Total Rewards and Legal each <Month> prior to cycle kickoff.
2. Approval by CHRO and CFO of thresholds, budgets, and system controls.
3. Post-cycle effectiveness review with HRLT and Finance.

Documentation and Audit

• Store signed approvals, methodology documents, and key outputs in <Repository Name> with version control.
• Maintain a register of exceptions including employee ID, action, reason code, approver, and effective date.

Examples and Use Cases

Case 1: Green-Circled New Hire

• Employee E<Number>, Grade <G6>, 10 percent below minimum due to rare skill pivot. Plan: 6 percent market adjustment now, 4 percent at successful completion of <Milestone> by <Date>.

Case 2: Red-Circled Legacy Manager

• Employee E<Number>, Grade <G9>, 5 percent above maximum following acquisition. Plan: lump-sum in lieu of base increase; assess promotion potential within 6 months; consider re-slotting if role scope increased.

Case 3: Structural Repricing

• Grade family shows median compa-ratio at 88 percent and turnover at 14 percent in <Country>. Action: increase midpoints by 5 percent, adjust minimums to maintain spread; targeted market adjustments for critical roles.

Frequently Used Queries and Checks

• Employees with compa-ratio below 85 percent and tenure greater than 2 years.
• Employees above 105 percent compa-ratio with performance rating below expectations.
• Roles with more than <Percentage> of incumbents in the bottom quartile across <Function>.
• Manager teams with green or red incidence above threshold.

Manager Enablement and Training

• Provide guidance documents with examples and FAQs.
• Offer training sessions before and during the comp cycle with scenario-based exercises.
• Enable system warnings when proposed increases result in out-of-range outcomes.

Glossary

• Base Salary = Fixed cash compensation excluding variable pay.
• Compa-Ratio = Base pay relative to range midpoint; indicates market positioning within structure.
• Geo-Differential = Adjustment reflecting labor market cost differences by location.
• Green-Circled = Base pay below the approved range minimum.
• Lump-Sum = One-time cash payment not added to base pay.
• Midpoint = Central reference point of a pay range aligned to the target market position.
• Range Penetration = Percentage of range traveled from minimum to maximum.
• Range Spread = Percentage width of the range relative to the minimum.
• Red-Circled = Base pay above the approved range maximum.
• Target Market Position = Desired competitive stance (e.g., 50th percentile) guiding the midpoint.
• Total Rewards = Function overseeing compensation, benefits, recognition, and related programs.

Communication Section: Understanding Your Pay Range at <Company Name>

Intended audience: employees and managers

At <Company Name>, each role is aligned to a grade with a pay range that includes a minimum, a midpoint, and a maximum. These ranges help us make fair, consistent, and market-informed pay decisions. Your individual base pay is placed within the range based on your skills, experience, performance, and the scope of your role, as well as the market for similar work in your location.

When we talk about compa-ratio, we are describing how your pay compares to the midpoint of the range for your role. A compa-ratio around 100 percent means pay is aligned with the range’s market reference. A lower compa-ratio often reflects earlier stages of development in a role or recent hire status. A higher compa-ratio can reflect deeper experience or sustained strong performance. Range penetration describes where your pay sits between the minimum and maximum. For example, if you are near 25 percent penetration, you are closer to the start of the range; if you are near 75 percent, you are closer to the top.

What this means for you:

• If you are earlier in your role or building new skills, you may be placed lower in the range, with opportunities to progress based on impact and growth.
• As you develop, deliver results, and take on more responsibility, your pay can move through the range over time, including through annual increases or promotions when appropriate.
• If your pay is below the minimum (green-circled), we will work with you and your manager on a plan to bring pay to at least the minimum, usually within a defined timeframe and subject to local laws and policies.
• If your pay is above the maximum (red-circled), you may receive lump-sum awards in lieu of base increases until the range catches up or responsibilities change.

Our goal is to balance external competitiveness with internal equity. Not every employee will be at the midpoint, and movement through the range is not automatic. We assess multiple factors, including market conditions, company performance, budget, and your individual contributions.

What this does not mean:

• Your position in the range is not a judgment of your value as a person. It is a guide to help us make consistent pay decisions for roles and responsibilities.
• It is not a guarantee of future increases. Pay changes depend on business results, available budget, and performance.

How to learn more:

• Talk with your manager about your current position in the range and your development plan. Ask what skills or outcomes will help you progress.
• Review our Compensation and Pay Transparency Guidelines on <Intranet Link> for additional context.
• If you have questions about how ranges are set, Total Rewards and your HR Business Partner can help.

Finally, we are committed to fairness and compliance with applicable pay laws in <Country/Regions>. If you believe information about your role or pay range is inaccurate, please raise it with your manager or HR so we can address it. We appreciate your contributions and aim to support your growth at <Company Name>.

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Document Information:

• Document Type: Pay Range Utilization Analysis
• Category: Base Compensation
• Generated: August 24, 2025
• Status: Sample Template
• Next Review: <Insert Review Date>

Usage Instructions:

1. Replace all text in angle brackets < > with your company-specific information
2. Review all sections for applicability to your organization
3. Customize content to reflect your company's policies and local regulations
4. Have legal and HR leadership review before implementation
5. Update document header with your company's version control information
6. At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.