Definition · Compensation and benefits
Range Penetration
Definition
Range penetration shows how far an employee's pay has progressed through their salary range, expressed as a percentage. 0% means they are paid at the range minimum, 50% at the midpoint of a symmetrical range and 100% at the maximum. Compensation teams use it alongside compa-ratio to steer raises and spot pay problems.
Also called: Position in range, PIR, Range position
Formula
Range penetration = (Employee pay − Range minimum) ÷ (Range maximum − Range minimum) × 100
- Employee pay
- Current annual base salary or hourly base rate, excluding bonuses and overtime.
- Range minimum
- The lowest pay in the salary range for the employee's grade or band.
- Range maximum
- The highest pay in that range.
Worked example
A claims adjuster earns $61,000 in a range of $50,000 to $75,000. Range penetration = (61,000 − 50,000) ÷ (75,000 − 50,000) × 100 = 11,000 ÷ 25,000 × 100 = 44%. She is slightly below the middle of her range.
How to read the result
A common way to interpret range penetration:
- 0% to 33%: lower third. Typical for new hires and recent promotions still learning the role.
- 34% to 66%: middle third. Fully competent employees performing as expected.
- 67% to 100%: upper third. Highly experienced or top performers.
- Below 0% or above 100%: pay is outside the range. Below 0% is green-circled and usually needs an adjustment; above 100% is a red circle rate.
It is a description, not a verdict. Someone at 85% with six years of strong ratings may be exactly where they should be.
Range penetration vs compa-ratio
Compa-ratio divides pay by the range midpoint, so it tells you where someone sits against the market rate. Range penetration tells you how much of the range they have used up, which matters for how much room is left for future increases.
The difference shows with wide ranges. In a range of $40,000 to $80,000 with a $60,000 midpoint, an employee on $66,000 has a compa-ratio of 1.10 and range penetration of 65%. The compa-ratio sounds high; the penetration shows there is still a third of the range left. In a broad band, such as one created through broadbanding, range penetration is often the more useful measure.
How comp teams use it
Merit matrices sometimes use range penetration rather than compa-ratio on one axis: a strong performer at 20% penetration gets a larger percentage increase than a strong performer at 80%. It also helps with offers. A recruiter making an offer at 70% penetration for someone who will need a year to learn the role is setting up salary compression with the existing team, and leaving little room for future raises. Many employers set guidelines that new-hire offers fall between 0% and 50% unless approved.
For team or group analysis, calculate the average penetration by job and compare it with average tenure and performance. A group with high tenure and low penetration is a retention risk.
Frequently asked questions
What is the range penetration formula?
Range penetration = (employee pay − range minimum) ÷ (range maximum − range minimum) × 100. The result is a percentage of the range the employee has moved through.
What is a good range penetration?
There is no single good number. For fully proficient employees, the middle third (about 34% to 66%) is typical. New hires usually sit lower and long-tenured top performers higher.
What does position in range mean?
Position in range is another name for range penetration: where an employee's pay sits between the minimum and maximum of their salary range.
Can range penetration be negative?
Yes. A negative result means the employee is paid below the range minimum. A result above 100% means they are paid above the maximum.