What are salary bands?
Salary bands, also known as pay ranges or pay scales, are ranges of salaries for specific job positions. Organizations use them as part of their compensation management strategy.
These bands define the minimum and maximum compensation levels for jobs in a particular category, giving flexibility within a defined range for salary decisions—so that the hiring team can then choose the level of salary range penetration.
Salary bands build employee trust through transparency and can also help attract and keep talented people.
What are some examples of salary bands?
Here are some examples of what salary bands tend to look like:
Advantages and disadvantages of using salary bands
Using salary bands can be a double-edged sword. While they come with a whole host of benefits, they can also bring some disadvantages:
|Ensure fair and equitable pay
|Harder to customize compensation packages
|Reduce unconscious bias
|Need to be regularly updated
|Transparency builds employee trust
|Difficult to categorize complex jobs
|Ensure pay is competitive in the job market
|Take a lot of time to set up
How can you create salary bands?
Creating salary bands involves several steps:
- Job evaluation: Evaluate the responsibilities and requirements of each job position within the organization
- Market research: Gather market data through salary surveys and industry reports to discover average pay rates for similar jobs
- Establish salary ranges: Based on the job evaluation and market research, set salary ranges that align with the objectives of compensation management outlined by your organization
- Define pay progression: Outline the pay progression within the salary bands based on factors such as experience and performance
- Communicate and implement: Clearly communicate the new salary band structure to your people and start putting it in place
What’s the difference between salary bands and job grades?
Salary bands are broad ranges of compensation that apply to a particular job, multiple job positions, or job families. They offer flexibility for setting individual salaries within a defined range.
Job grades, on the other hand, group similar jobs based on their value and contribution to the organization. Each job grade has a specific salary band associated with it, and all positions within the same grade receive the same salary range.
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What are some salary band best practices?
Salary bands aren’t just something that you can set and forget. To make sure they stay effective, there are a few best practices to keep in mind:
- Regular reviews: Regularly review and update salary bands to stay competitive in the job market
- Data first: Base salary band decisions on data from job evaluations and market research to keep them accurate and fair
- Flexibility: Allow for some flexibility within the salary bands to account for exceptional performers, so you can reward them appropriately
- Communication: Clearly communicate the salary bands to all team members, ensuring transparency
How can HR tech help maintain salary bands?
Effectively maintaining salary bands can add a lot of work to your plate. But luckily, HR technology can help.
You can use compensation management software to administer and track salary bands easily. HR tech can also integrate with salary survey databases, so you can make sure your salary bands are updated with the latest information and remain competitive.
That way, you’ll continue to attract and retain talented people.
HR tech can also help you keep an eye on equity when it comes to compensation. Certain tools can generate reports and analytics on salary band distribution and compensation trends, so you can make sure everyone gets their fair share.
HR tech can also make it easier to identify who to reward and promote. You can integrate performance management systems with compensation data to link pay progression to employee performance.
Following the best practices outlined above, along with making the most of HR tech, can help you maintain salary bands that are fair and part of a competitive compensation plan—promoting equity and attracting the best of the best to your company.