How to decide salary ranges in 2026

With 32% of workers reporting cutting back on essential spending amidst high living costs, employee and candidate demands are evolving. While benefits, work-life balance and career growth are important, salary is the most important factor for 80% of workers when choosing a new role.

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In this guide, we’ll explore the importance of salary ranges and how to structure them within your compensation packages.

What is a salary range?

A salary range is a structured spectrum of compensation an employer is prepared to offer a candidate for a specific role. This helps to establish a minimum and maximum salary that reflects factors like: 

• Responsibilities
• Required skills
• Market conditions
• Organisational budget 

Salary ranges therefore serve as transparent guidelines for employers and candidates while promoting fair and competitive practices. 

How salary ranges work

Salary ranges reflect the reality that not everybody has the same level of experience or expertise. So, for example, someone applying for the cashier role above who has never had a full-time job might expect to come in at the lower end of the range.

However, someone with a few years of experience will require less training and bring with them additional knowledge and experience, and therefore would expect to be offered a salary near the top of the range.

Aside from attracting candidates, salary ranges can provide current employees near the bottom of the spectrum with a clear progression path, highlighting the potential rewards on offer for good performance.

The importance of salary ranges

Utilising ranges as opposed to fixed salaries can be advantageous for several reasons, including: 

• Improving transparency: Candidates often get frustrated when salary isn’t discussed until later on in the hiring process, with 33% of recruiters seeing candidates drop off when salary expectations aren’t addressed early on. Communicating clear ranges allows employers and recruiters to set clear expectations, ensuring candidates enter the process with a realistic understanding of what’s on offer.
• Ensuring fairness: Every candidate brings unique skills and experiences to the table. A clear salary range allows for flexibility, ensuring individuals are compensated according to their qualifications and the overall value they can bring to a role.
• Providing consistency: Salary ranges help standardise renumeration across an entire organisation, maintaining equity and coherence, enabling employers to offer suitable compensation to candidates at different stages of their career without creating unfair discrepancies in pay for similar roles.
• Attracting talent: A well-defined and clearly communicated salary range signals to potential hires that an employer values their experience and expertise. It can also help boost applications during the hiring process, with 80% of talent admitting to avoiding applying for roles that don’t include any information around the salary on offer.
• Reducing turnover: Implementing salary ranges allows room for professional development within a role, giving employees the opportunity to grow professionally while benefitting more financially. This potential for advancement helps to foster satisfaction and engagement across the workforce, which it turn can help to boost long-term retention. 

How to determine a salary range

Creating a salary range is a strategic process that requires careful consideration of numerous factors, as it’s vital that the range reflects not only the role’s responsibilities but also market trends, organisational budget and internal pay equity. 

Below we’ve outlined the steps you can follow to establish effective salary ranges across your workforce.

Step 1: Start with accurate and detailed job descriptions

In order to know what salary to offer for any given role, first you really need to understand the role itself and what’s expecting from a successful candidate. 

This process starts with creating accurate and detailed job descriptions. These can then inform the job advertisement for the role, the expectations that are set upon hiring a candidate and the salary on offer.

Tip: When drafting job descriptions, it’s crucial to think beyond the here and now. Consider what kind of growth is expected in the role, especially if it’s an entry-level position, and the potential changes to responsibilities that may be involved.

Further reading

How to write an effective job description

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Step 2: Conduct market research and benchmarking

As employer compete to onboard top talent, it’s vital to stand out from the crowd with an enticing offer. 

As a result, it’s vital to understand the landscape and jobseeker expectations. 

There are several resources that can be used to conduct this research, such as: 

• Salary data sources such as Totaljobs’ Salary Checker.
• Industry reports and salary surveys. Many sectors will have annual reports detailing the average salaries on offer for certain roles and any trends that you need to be aware of to help you benchmark accurately. 
• Government databases such as the Office for National Statistics, which offers a wealth of information.

Tip: When benchmarking salaries, remember to factor in things like location, the current cost of living and if there are opportunities for hybrid and/or remote work in the role.

Step 3: Assess your budget and financial capacity 

There’s not point offering highly competitive employee salaries if it ultimately puts your organisation’s financial health at risk. 

Remember, while salaries are essential to attracting and retaining talent, your compensation strategy needs to remain aligned with what you can realistically offer candidates. 

As a result, determining a salary range requires being aligned with your organisation’s budget, thereby balancing competitiveness with financial sustainability. This helps to ensure that your approach to compensation support broader organisational goals without overextending resources. 

Collaboration with finance teams is crucial here. 

Where possible, look ahead and forecast how salaries may need to be adjusted over the coming years, taking into account factors like: 

• Performance
• Cost of living
• Inflation
• Changes in the market 

Tip: Before signing off on any salary range, ensure it aligns with your organisations pay structure and internal equity in order to maintain fairness.

Step 4: Develop clear salary ranges for each role

Once the research, benchmarking and alignment with finance have been taken care of, it’s time to set salary ranges themselves. 

During this process, three stages within the salary range should be established: 

• Minimum salary
• A midpoint
• Maximum salary 

These should be based on skills and experience, with expectations of candidates clearly defined for each position on the scale, allowing anyone involved in the hiring speed to quickly get up to speed. 

Tip: Accounting for performance and contribution by setting criteria for moving within or to the top of the range should be considered during this process.

Step 5: Factor in total compensation

While competitive pay is key to talent attraction and retention, bonuses, benefits and other perks also have an important role to play. For example, we found that flexibility is a deal-breaker for 43% of candidates. 

So, when defining salary ranges, look to factor in the full package on offer.

There are a wide range of benefits employers can offer in order to appeal to both candidates and employees, including: 

• Flexible hours
• Sick pay above what’s required
• Increased pension contributions
• Hybrid and remote working
• Learning, training and skills development 

Implementing incentives that resonate with employees and candidates can help reduce turnover and keep staff motivated, and is an increasing focus for employers, with PwC research showing 54% of organisations are looking to review their current non-financial benefits.

Step 6: Clearly communicate salary ranges

Once salary ranges have been set and the total compensation available defined, it’s important to be as transparent as possible with jobseekers and employees. This can be done by publishing the information within the job advert or communicating it clearly during the recruitment process.

Clear communication around salaries has the added benefit of making it less likely candidates will seek out salary details on third-party sites were information might not always be accurate or up to date.

Tip: Providing details around salary can help attract more applications for your open roles, with only 60% of job ads currently including salaries.

Step 7: Monitor and update salary ranges

The economy, inflation and rising living costs mean that salary expectations and demands are consistently in a state of flux. For example, we found that 63% of UK workers received a pay rise in 2025. 

As a result, failing to monitor and regularly update salary ranges for open roles can result in your organisation falling behind competitors in the hunt for talent. It can also put you on the back foot when it comes to salary negotiations with candidates. 

To ensure that salary ranges remain competitive and support talent acquisition efforts, consider conducting annual reviews. This can be achieved by following the steps above, paying close attention to the research and benchmarking process.

Tip: Conducting bi-annual reviews of salary ranges can help your organisation stay ahead in an evolving labour market.

Using salary ranges to support fair, competitive hiring

Salary ranges are more than a recruitment tool. They’re a foundation for fair pay, transparency and long-term workforce planning. So, as living costs rise and candidate priorities shift, regularly reviewing and updating salary ranges ensures organisations remain attractive to talent while supporting retention, engagement and internal equity.

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