How to Set Realistic Salary Bands for HR Roles (Without Overpaying or Underpaying)
Misaligned salary expectations are one of the top three causes of failed hires in HR functions. Many companies still use outdated references, generic job titles, or a one-size-fits-all approach when it comes to setting salary bands. The result? Either overpaying underqualified candidates or losing top talent to more competitive offers.
This guide provides a structured, lean, and practical method for building and maintaining HR salary bands that work—especially for companies in Energy, Manufacturing, and Healthcare sectors in Indonesia.
1. Why HR Salary Banding Often Fails
Common issues include:
- Using global data with no relevance to the local job market.
- Relying on internal past hires as reference points (which might have been mispriced).
- Ignoring role-specific complexity and scope.
- Benchmarking based on job titles, not functional impact.
- Not adjusting for regional or sector-specific variations (e.g., head office vs. plant/site roles).
When salary bands are misaligned:
- Candidates decline offers late-stage due to salary mismatch.
- Top performers quickly leave for better-paying roles elsewhere.
- Internal resentment builds from unequal pay for similar contributions.
2. Principles of Smart HR Salary Structuring
A strong HR salary strategy should be:
- Sector-specific: Healthcare HR isn’t the same as Manufacturing HR.
- Data-grounded: Based on actual market salary trends, not assumption.
- Tiered: Reflecting entry-to-expert capability within the same level.
- Evolving: Updated annually or in response to market shifts.
3. Key Inputs to Define Salary Bands
A. Job Impact and Scope
- Strategic vs. operational roles.
- Single vs. multi-site responsibility.
- People management vs. individual contributor.
B. Experience Benchmark
- Match years of experience with expected outcomes, not only seniority.
C. Location Factor
- Jakarta-based HR vs. site-based roles (e.g. in Kalimantan, Batam, or Medan).
- Head office vs. operational unit (clinic, plant, mine).
D. Sector Norms
- Example: C&B roles in Manufacturing typically earn higher due to complex shift patterns and compliance reporting.
- L&D roles in Healthcare often get budgeted lower, unless training compliance is tied to accreditation.
4. Practical Framework to Design the Salary Band
| Step | Action | Details |
|---|---|---|
| 1 | Define job families | HR Generalist, Talent Acquisition, C&B, OD, L&D, Admin |
| 2 | Segment by level | Entry (0–2 yrs), Mid (3–6 yrs), Senior (7–12 yrs), Executive (12+ yrs) |
| 3 | Use credible benchmarks | Industry salary reports, local job board insights, internal analytics |
| 4 | Apply 3-bucket model | Minimum (acceptable for junior), Market (target median), Maximum (for highly experienced) |
| 5 | Review annually | Align with business growth, inflation, turnover pattern |
5. Sector-specific Examples
Energy Sector – HR Business Partner (Site-based)
- Experience: 7–10 years
- Job Level: Senior
- Location: Kalimantan mining site
- Monthly Salary Band (Gross): IDR 25M – 38M
Manufacturing Sector – C&B Analyst
- Experience: 2–4 years
- Job Level: Mid
- Location: Tangerang industrial zone
- Monthly Salary Band (Gross): IDR 10M – 16M
Healthcare Sector – HR Manager (Hospital)
- Experience: 8–12 years
- Job Level: Senior
- Location: Jakarta (Private Hospital Group)
- Monthly Salary Band (Gross): IDR 23M – 32M
6. Internal Salary Band Governance (Do’s & Don’ts)
Do:
- Maintain transparency with line managers on band ranges.
- Tag every job opening with a salary band before opening search.
- Communicate clearly to candidates the full compensation breakdown.
Don’t:
- Let negotiation dictate the band—stick to job evaluation metrics.
- Publish vague “negotiable salary” roles; this repels senior talent.
- Assume title = level. Always clarify expectations and scope.
7. Tools & Templates to Use (Lean Setup)
- HR Role Matrix Template (mapping roles across functions)
- Salary Band Tracker (Excel/Notion, grouped by job level + sub-sector)
- Candidate Feedback Log (track rejections due to comp issues)
- Compensation Calibration Sheet (compare internal vs. market value)
8. Summary for HR Leaders and Business Owners
Getting salary bands right is not just about hiring—it’s about retention, culture, and internal parity. Especially in HR roles, where staff are aware of benchmarks and peers, outdated or imbalanced compensation quickly becomes a turnover risk.
By using a lean, role-based, sector-specific approach, you ensure:
- Faster close rates on quality candidates.
- Lower risk of internal equity issues.
- Stronger long-term employer reputation.
Ready to align your HR pay structure with the market?
Let SlimHire assist your next HR hire with curated salary benchmarking across Indonesia’s top growth sectors.
