Adjusting Your Salary Range Structure: How? How Often?

I get these questions a lot this time of year (although, ideally, it is a question that should have been raised a few months ago).  Salary range structures must be regularly reviewed and updated in order to remain competitive.  I believe that in today's competitive market for talent, it must be done every year.  Allowing your structure to stagnate competitively - these days - will come back to bite you sooner rather than later.

You have a couple of options for accomplishing this:

1. The Quick & Dirty Option (also known as the "Finger to the Wind" Option).  With this option, you collect and consider trend information to get a sense of what has been happening and what is projected to happen in terms of salary increases and salary adjustments.  This information shows up all over the place in the late summer of each year (look here, here, and here for U.S. data and here for International data).  Then simply adjust your ranges by the amount you deem necessary to stay in line with competitive movement.  Note that I recommend relying more on average salary increase figures than structure adjustment figures; more on that in this earlier post.
2. The In-Depth Competitive Assessment Option.  With this option, you select a representative sample of jobs (I recommend at least 1/3 of the jobs covered by the structure) which you believe will be easy to benchmark using available published compensation surveys, go out and collect the competitive salary data, and then use this data to assess the degree to which your ranges should be adjusted (as well as to identify any jobs or job families whose pay is moving at a different clip than the rest of the market and may need to change grade or salary range level).  A comparison of your salary range midpoints/control points against the market medians across the benchmark jobs will accomplish this for you.

I recommend alternating between these options annually (i.e., "Quick & Dirty" the first year, "In-Depth Assessment" the second year, "Quick & Dirty" the third year, etc.) for most organizations.  This seems to provide a good balance between cost efficiency (who has the time and resources to do an assessment every year) and maintaining competitiveness.   Waiting until the third year for your "In-Depth Assessment" may be acceptable, but just know there will be a lot to fix by the time that third year rolls around.

If you don't yet have a plan for determining how to adjust your salary range structure (and assuming your structure operates on a calendar year), time to get moving!