What is Salary Midpoint?
The salary midpoint is the central value of a pay range for a specific job or job grade—calculated by averaging the minimum and maximum salaries for that range. This midpoint often represents the competitive market rate for a fully competent employee performing the role with moderate experience.
Why Salary Midpoint Matters in HR
Using the salary midpoint helps HR establish internal equity, maintain external competitiveness and provide transparency in compensation practices. By designing salary ranges with a defined midpoint, organisations ensure that employees at similar levels are paid fairly relative to market benchmarks. It also guides decision-making for salary offers, merit increases and role evaluations.
Furthermore, tracking how far employees’ salaries deviate from the midpoint—often via metrics like the compa-ratio—alerts HR to potential pay compression, misalignment with market rates or inequitable structures.
How to Calculate and Use the Salary Midpoint
Calculating the salary midpoint is straightforward, and applying it strategically strengthens compensation design:
- Calculate the midpoint: Add the minimum and maximum salaries of the pay range, then divide by two. For example: ($60,000 + $80,000) ÷ 2 = $70,000.
- Reference market data: Ensure the midpoint aligns with current industry benchmarks, location-based costs and job responsibilities.
- Monitor placement: Use the midpoint to evaluate where employees fall within the range (e.g., entry-level below midpoint, experienced at or above midpoint).
By anchoring compensation practices around a well-defined salary midpoint, HR can maintain pay fairness, support career progression and keep salary structures aligned with evolving market conditions.
