• The job families you map to and create will vary depending on the data sources you choose to use. For example each salary benchmarking provider will have a description for each job family that you can read and then decided which one matches your role most accurately.
• Job Families ensure you can identify the compensation data that most closely matches the job or team you are looking for, therefore giving you a more accurate data.
• The Job Family relates to the specific type of work or skillset (’Talent Acquisition, Human Resources, L&D etc’), while Departments are broader (’HR’)

1. You can group by departments should you wish, however…
2. “If you use Departments you’re essentially comparing apples to apples regardless of whether it’s an eating apple or a cooking apple; when using Job Families you’re comparing Granny Smith apples to Granny Smith apples.”

• The most common structure among scaling tech companies is a two-track structure as shown in the diagram below.
• You either take a track managing people or becoming a specialist managing projects and processes.
• Separate tracks for ICs and people managers allows employees to develop according to their interests and skillsets and ensures people are working where they will be most effective.
• Typically both tracks are valued equally, so the same base salary is used at each level, regardless of whether someone is on the IC or People Manager track in the same department. If this isn’t the case in our organisation then it’s not a problem.

• Levels define how senior / experienced the role is.
• Job levelling criteria is used to define the overall ‘profile’ and ‘size’ of every role and level in the organisation. This is sometimes referred to ‘scope’, ‘responsibility’ and ‘influence’ depending on the levelling framework you are using.
• Choosing your levelling framework - Each salary benchmarking provider has their own levelling framework. You can view some of the most popular ones here.

• This model is perfect for when you have limited market data - you only need one data point for your lowest level.
• Starting with your Level 1 midpoint, the model automatically calculates midpoints for all higher levels using a percentage increase between levels (called the midpoint differential).
• For example, if Level 1 midpoint is £30,000 and you set a 15% progression, Level 2 would be £34,500, Level 3 would be £39,675, and so on.
• You can then fine-tune the salary ranges by adjusting:
• The midpoint differential % between levels
• The spread % within each level (distance from minimum to maximum)
• The model uses the pay range spread percentages defined in column D to calculate the minimum and maximum salaries for each band.

This advanced model uses mathematical principles to create logical salary progression across levels, even with incomplete market data.

Here's what it does:

1. Automatically fills missing salary data points ✅
2. Ensures logical salary progression between levels ✅

Key Features:

• Creates forward and backward projections to fill gaps in your data
• Prevents salary inversions (where a higher level would pay less than a lower level)
• Works with as few as two data points to build a complete structure

How it works:

• Uses Excel/Google Sheets' GROWTH function to calculate salary progression
• Takes your existing salary data (X = levels, Y = salaries) and applies exponential regression to predict missing values
• Creates a smooth, logical progression between all levels
• The model uses the pay range spread percentages defined in column D to calculate the minimum and maximum salaries for each band.

For the technically minded: The model uses exponential regression through the GROWTH function to predict values based on existing data points. Learn more about the GROWTH function here.

This approach applies a percentage directly above and below the midpoint to calculate the minimum and maximum values of a salary band. It is simpler than other methods, as it does not involve compounding.

Here's how to use it:

1. Enter your market data (either raw data or smoothed data from another model) in the midpoint column.
2. Modify the ‘% Above and below midpoint’ column
• This determines the min / max as a percentage below / above the midpoint.
• Minimum = Midpoint × (1 − band %)
• Maximum = Midpoint × 1 + band %)

Example:

If the midpoint of a salary band is £50,000, and the band allows for 20% below and 20% above, the calculations are:

1. Minimum: £50,000 × (1−0.20) = £50,000 × 0.80 = £40,000
2. Maximum: £50,000 × (1+0.20) = £50,000 × 1.20 = £60,000

Key Points:

• This method assumes a symmetrical band where the same percentage is applied both above and below the midpoint.
• It’s straightforward and ideal for organisations looking for simplicity without requiring compounding calculations.
• Unlike the Pay Range Spread Method, it doesn’t ensure symmetry based on geometric adjustments, but it can be effective for simpler use cases.

• This model is perfect when you have minimum and maximum salary data but no midpoint. For example, when a hiring manager provides a salary range like "£40,000 - £60,000".
• The model calculates the midpoint as the arithmetic mean between the minimum and maximum: Midpoint = (Minimum + Maximum) ÷ 2
• Important notes:
• This model doesn't perform any data smoothing or progression calculations
• You should input reliable market data to ensure logical progression between levels
• Use this when you have confidence in both your minimum and maximum figures

• Enter your market data in the data column.
• If the data looks uneven, you can smooth it by adjusting the % premium or discount on market column. If it looks fine, leave these at 0%.
• For levels with no data, the formula will use the next adjacent midpoint below, and you can apply a positive % to create appropriate data for that level.
• Next, define the pay range spread—how wide you want the band to be from the minimum to maximum point.
• Finally, determine how much you want the salary bands to overlap (or not overlap) between adjacent levels. The overlap percentage works as follows:
• Negative Percentage: Creates a gap between salary bands, meaning there's no overlap between levels
• 0%: Makes the maximum of one level exactly match the minimum of the next level (bands touch but don't overlap)
• Positive Percentage: Creates an overlap between levels, with the percentage determining how much the bands overlap
• You're now left with a set of clean, sensible bands built in a formulaic way!

• This is the difference between the midpoints of each adjacent level i.e. the % jump in salary from one level to another.
• Formula:
• (Midpoint of level above - Midpoint of level below) / Midpoint of level below

• Typically, lower-level jobs tend to have a smaller midpoint differential as the progression from one level to another is quicker. The differential increases for higher-level positions, but this does depend on the market data being used.

Level	Typical midpoint progression
Support position	10%-15%
Professional, Managerial	15%-25%
Executive	20%-35%

• Using pure market data for the midpoint, may well result in inconsistent midpoint differentials. These uneven midpoint differences happen unintentionally over time and very common when you use data submitted and aggregated from 1,000’s of companies.
• Midpoint progression will also determine the overlap between adjacent levels.

• The lowest point in the range (typically new to role)
• Formula: Midpoint X (1 - X%)

• The highest point in the range (typically ready for promotion)
• Formula: Midpoint X (1 + X%)

• The competitive market position you select is placed in the exact middle of the salary band, also known as the 'Midpoint'.
• In the example below, the chosen competitive position is the 75th percentile which results in a midpoint of £21,500.
• The data you input into your midpoint, is then used as the ‘anchor’ from which to create the min and max salaries in the range (we’ll cover setting bandwidths later on).

What are percentiles?

When using salary benchmarking data, you’ll notice the market data is broken into percentiles.

• Below the 50th percentile (lagging the market):
• For example, paying at the 25th percentile means your salary is higher than 25% of companies but lower than 75%.
• 50th percentile (meeting the market):
• If your aim is to pay at the average market rate, the 50th percentile is your target.
• Above the 50th percentile (leading the market):
• For example, paying at the 75th percentile means your salary is higher than 75% of companies, with only 25% paying more.

Which percentile should you choose?

The right percentile to target depends on two key factors: how strategically important the role is to your organisation i.e. critical vs non-critical roles and how competitive the talent market is for that position i.e. how much supply and demand is there for that role.

Since not all roles contribute equally to your business goals, using a differentiated pay strategy helps you allocate your compensation resources effectively.

You'll therefore likely end up with different market rates. This strategic approach allows you to invest more in critical positions—attracting, motivating, and retaining top talent where it matters most—while managing costs efficiently in non-critical areas.

1. Critical Job Families

These are the roles that truly move the needle—think product development, sales leadership, or unique technical expertise. Without these, your company’s growth, innovation, or customer success could stall.

• Pay strategy: Aim for the 75th to 90th percentile. Paying competitively for these roles ensures you attract and retain top talent in a competitive market.
• Why it matters: Underpaying for critical roles can lead to:
• Attrition: Losing key talent to better offers.
• Recruitment challenges: Struggling to hire the people you need.
• Performance issues: Delays or a drop in the quality of work.

2. Non-Critical Job Families

These roles, while important, don’t directly drive revenue or innovation—think administration, facilities, or certain support functions.

• Pay strategy: It’s often reasonable to target below the 50th percentile, as the demand for these roles is typically lower, and there’s a larger pool of candidates.
• Why it works: Saving costs here allows you to invest more in your critical roles.

Things to keep in mind when choosing a percentile

I always say that if you're able to attract and retain the talent you need while paying at the 25th percentile, then that’s your market rate. There's nothing inherently good or bad about the 25th percentile - same as the 75th percentile. There’s no need to feel pressured to aim for the 75th or 90th percentile, especially if doing so would put unnecessary strain on your financial sustainability, shortening the lifespan of the business. Pay must be sustainable!

If you’re successfully hiring and retaining people at the lower end of the market range without losing out on performance or quality, that’s an indicator that your approach is working for your current stage and goals.

If you start to see challenges with hiring or retention, or notice key talent being drawn away by better offers, it’s a sign to reassess and adapt. Paying competitively doesn’t always mean aiming high—it’s about paying intentionally and in alignment with what makes sense for your company.

Don’t forget about your Total Rewards package

When setting a competitive base salary, it’s essential to consider your entire total rewards package—not just base pay. Elements like equity, variable pay, benefits, and even intrinsic motivators play a crucial role in defining what “competitive” base pay looks like for your organisation.

• Equity and Bonuses: If you offer meaningful equity or performance-linked bonuses, you may not need to match the market on base salary. For example, startups often trade lower base salaries for equity upside, while performance-driven bonuses can enhance total compensation without inflating fixed costs.
• Benefits and Perks: Strong benefits (e.g., private healthcare, enhanced leave) or perks (e.g., flexible working) can make your total package more appealing, even if base salaries sit below the market median.
• Intrinsic Motivators: Factors like company purpose, career development opportunities, and a positive work environment are powerful. Employees often value these non-monetary elements just as much as financial rewards.

The key is to align your base market rate with what makes sense for your organisation. If your total package attracts and retains the talent you need, you’re hitting the mark—whether that’s at the 25th percentile, 50th percentile, or beyond for base pay.

Salary band widths vary across levels, job families, and companies.

The width of your salary bands is crucial because it determines how much room employees have to grow both within their current level and as they advance. Each band needs sufficient width to allow for meaningful base salary increases of 5-10% as employees develop their skills and experience.

Generally, a salary band's range corresponds to both the role's level and the typical time employees spend at that level. Think about how long someone typically stays at a level. That should guide how much room you give them to grow without needing a title change.

1. Levels 1-3
• These roles have narrower salary bands due to limited job scope, shorter time spent in the roles, and faster progression through lower levels.
• If the band is too narrow it means less probability to reward performance outside of promotions.
• Spread either side of mid-point = 10-15%
2. Levels 4-6
• The more senior roles typically have wider salary bands due to broader responsibilities, diverse experience levels, and longer time spent at each level.
• For instance, a senior software engineer with 5 years' experience may have different skills than one with 12 years, which justifies a wider salary band.
• Employees typically stay in these roles longer, so wider bands accommodate growth and expertise, allowing for salary increases without frequent promotions.
• However, if the bands are too wide, progression can stagnate unless regular salary increases of 8-10% are provided.
• Spread either side of mid-point = 15-25%
3. Executives
• Executive roles have wider salary bands due to the broad scope of responsibilities and varying experience levels. For example, a COO with 8 years' experience will have a different impact than one with 20 years, which justifies a wider band. The longer time spent at this level also requires room for growth within the same role.
• Some organisations allow greater overlap at higher levels, where pay may be similar for an experienced VP and a new C-level executive, reflecting the variance in incumbent pay.
• Spread either side of mid-point = 20-30%

Setting you band widths

To set the bandwidth (the range from minimum to maximum) for each level, you'll need to adjust the spread either side of the midpoint %.

Think of the Midpoint as your anchor (the Market Rate). This method stretches the band outward from that center by a set percentage, ensuring your "Target Pay" sits mathematically perfectly in the middle.

1. As you increase the % the bands widen.
2. As you decrease the % the bands get narrower.

To overlap, or not to overlap—that is the question.

1. Stepped structure

You structure will look something like this:

✅ Pros

• Clarity and Transparency: Stepped salary structures provide clear delineation between different levels of roles within an organization. Employees can easily understand their position in the hierarchy and the potential for advancement. This transparency fosters trust and reduces ambiguity, leading to greater satisfaction and engagement among employees.
• Cost Control and Budgeting: Stepped salary structures help organisations manage their payroll costs more effectively. By defining clear salary bands with no overlap, companies can establish predictable salary expenses based on employees' positions and performance levels. This makes budgeting more straightforward and allows for better financial planning, especially in times of economic uncertainty.
• This is a good option if speed is of the essence and you need to get your salary built ASAP.

❌ Cons

• You would need to promote someone to the next level in order to increase their salary even if they are not ready which is risky!

2. Overlapping salary bands

You structure will look something like this:

✅ Pros

• Raises without promotions to the next level
• One of the primary benefits of overlapping salary bands is that employees can receive raises without necessarily requiring a promotion. This approach allows organisations to reward employees based on performance and experience rather than their job title alone.
• Overlapping salary bands enable employees to be compensated at a higher level while maintaining their current role. For instance, if an employee's performance and experience surpass the requirements of Level 1 but don't yet meet the full criteria for Level 2, they can be placed in the overlapping region between the two bands. This ensures they are fairly rewarded without being pushed into responsibilities they may not be ready for.
• This method also supports employees who may excel in their current role without the need to expand their responsibilities prematurely. It recognises and rewards excellence in a smaller role, fostering a more focused and skilled workforce.
• Additionally, there might be no immediate business need to move an employee into the level above. Overlapping bands provide the flexibility to reward high performance without forcing organisational changes or creating roles that are not currently required by the business. This helps maintain operational efficiency while still recognising and incentivising employee contributions.
• New vs Existing employee
• Overlapping bands recognise the greater value from a highly experienced/skilled employee at the top of their level compared to a newly-appointed employee on the lower end of the level above, who is on a learning curve and unproven in their role.

❌ Cons

• Promotions: When you promote someone to the next level but their pay may not go up as much as expected (dependent on the degree of overlap), which isn’t particularly motivating for the employee. You’ll need to set a policy where a promotion is accompanied by a specified minimum percentage increase.
• Too much overlap: This can lead to pay inequity.
• Communication challenges: Explaining the concept of overlapping bands and that an employee one level below can be paid the same as the level above can be confusing.
• Complexity: Managing overlapping salary bands can be complex and requires careful monitoring.

How much overlap should you aim for?

• 5–20% overlap is generally healthy—enough to support in-role growth and smoother transitions.
• Over 30% starts to blur the lines and may weaken the signal that comes with a promotion.

N.B.

• When midpoint differentials are large between adjacent levels, band overlap is minimal or can’t be achieved.
• When midpoint differentials are small between adjacent levels, band overlap is significant.

• Yes, you need them. Like it or not, they play a critical role in salary benchmarking.

I regularly meet orgs who feel that they are too small for levels or that they’ve managed to date without them and introducing them would damage the culture. I’m not going to dismiss these challenges, however if you want to carry out a salary benchmarking exercise you will need levels in some shape or form. If you don’t want to introduce levels or some form of seniority/hierarchy into the the organisation, then you won’t be able to carry out salary benchmarking. There is no halfway house.

• An organisation can have any number of levels. There is no magic number, however most of the salary benchmarking providers have between 8-12 levels, and these will depend on the size of your org.
• Below is a typical organisation structure consisting of:
• Two tracks
• 8 levels (IC1 - C-Level)
• Sub-levels - This is just another way to talk about the min, mid and max of a range. I personally find it as an easy way to objectively place an employee into either the min, mid or max point of a range. To determine a person’s sub-level we ask ourselves: “How established are they in the role within your organisation?”

Here are some short descriptions about tracks.

Track 1 - "IC" (Individual Contributor)

• Focus: Becoming a specialist in their role
• IC will suit people if they enjoy:
• Building bigger and better systems and processes
• Knowing and understanding the micro details of how we get things done (and why)
• Quickly identifying how to solve problems in their team
• Getting creative with their technical knowledge
• Working collaboratively with more experimental colleagues to apply their knowledge to improve our ways of working
• Iterating and improving
• Looking for new opportunities and testing them out

Track 2 - "M" (People Manager)

• Focus: Hiring, team organisation, and helping people progress in the business
• Manager will suit people if they enjoy
• Managing others, delegating work, building a team
• Team organisation, including holiday management, role forecasting, and performance documentation
• Guiding others through complex interpersonal and communication challenges
• Mentoring, training, and leading others
• Coaching and supporting others through their careers, difficult situations, and day-to-day work

To place someone in a salary band, you need to have a strong conviction on their performance i.e. you have a fair and objective performance review process in place. I recommend not using sub-levels until you have robust measures of performance in place.

• Before using any of these models, you will need some market data. I have populated the models with sample data in order to demonstrate how they work.
• If you don’t have any market data, then you are welcome to schedule a call with me to discuss how to choose a salary benchmarking provider using the link here. There are lots of salary benchmarking providers out there, and below are a few that I have worked with:
1. Pave / Option Impact
2. Ravio
3. Figures
4. Radford
5. Willis Tower Watson
6. Salary.com
7. Mercer
8. TalentUp

• I always recommend checking the data with the hiring managers and any in-house recruiters who will know the role and market best.

• There are no right or wrong decisions to make when choosing which model to use. The choice you make will depend on the data you have and also the pay strategy you wish to implement.

• Key decisions:
• Which model best suits your needs?
• Do you have plenty of market data to feed into the model you’ve chosen?
• Do you want overlapping bands at some levels and not others?
• How wide do you want your bands? i.e. the distance from the min to the max point at each level?

• The main disadvantage of the polynomial models is their sensitivity to outliers in the data set. Even a single outlier can significantly impact the results and render analysis useless.

• Email me at alistair@justly.company and I’ll do my best to help you.