Streamline Your Compensation Strategy: Create Equitable Salary Bands in Minutes, Not Hours

https://www.loom.com/share/6b4c006ef3674e90b56b2267b8a87460?sid=1afd9ca8-ed31-4dba-9562-bc5d57ca264e

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Intro

A salary band shows how a salary grows within each level, defined by a minimum, midpoint and maximum.

Salary bands may also be referred to as:

1. ‘Pay bands’
2. ‘Pay ranges’
3. ‘Salary ranges’

Example job family consisting of 8 levels and salary bands

Why are salary bands so useful?

Salary bands support you in making structured and equitable pay adjustments.

They can be tied to growth

• A salary band is a great way of giving an employee an idea of their earning potential within a level as they grow. As they pick up new responsibilities and increase their impact, they can being rewarded accordingly by moving through the salary band and being assigned a ’sub-level’ or ‘% of progress made within a level’.

• Assigning someone a sub-level can provide clarity on their position within a level and motivate them to set appropriate development goals. This is particularly important for more senior roles, since employees may spend a significant amount of time within one level. Therefore it's critical they understand their standing within that level to prevent feelings of stagnation.

• To determine a person’s position in a salary band we ask ourselves: “How established are you in the role within your organisation?” i.e. what is the employee's proficiency in a level?

  New (min) 0%	Established (mid) 50%	Advanced (Max) 100%
  • Learning the skills and responsibilities
  • New to that level or the company
  • Management Approach = Direct	• Matching the skills and responsibilities
  • Strong experience at that level, takes on delegation
  • Starting to take on c.50% of the level above
  • Management Approach = Delegate	• Exceeding in the skills and responsibilities
  • Excelling at that level, pushing to develop
  • Comfortable with c.80% in the level above.
  • Management Approach = Develop

  The salary band positioning descriptions above are examples and are closely aligned to the concept of low, medium and high TRM (task-relevant maturity). You can read more about TRM here. N.B. These are just examples and can be modified based on your unique culture and approach to performance.

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Is it possible for someone to be a high performer while being at the lower end of their salary band?

• Absolutely. Your position in the salary band reflects your experience level and growth potential in the role, not your performance. For instance, an employee who has recently been promoted may be performing excellently while still being at the lower end of their new band as they develop expertise in their new position.
• Conversely, you could be at the top end of the band but be a poor performer because of declining output or not keeping up with evolving role requirements despite having extensive experience. </aside>

Help drive pay equity

• Salary bands help ensure that employees at the same level are being paid within the same range, which help lessen the gender pay gap.
• In addition to this, by having a minimum and maximum rate for every job, and then placing employees into this range by selecting a sub-level, you can easily explain to employees why one is earning way more than the other despite having the same role and level.

Critical for financial planning

• Having a clear pay structure that all roles are aligned to allows for accurate financial planning for future roles and salary raises.

Helpful for hiring

• You can put a salary band on a job advert. I’m not going to go into why this is the right thing to do, but let my friends at Otta do the talking here.
• Giving you some flexibility on where to pay a new hire as you can objectively place them in the range, and not necessarily always at the bottom. For example they could be moving internally within the organisation and not start at the min point.

To build salary bands you need 3 essential components

1. Job architecture

You need to organise your company into the following elements. This structure provides a foundation for building your salary bands and ensures you're comparing equivalent roles when mapping back to the market.

• Job Families
• Tracks
• Levels