Create salary bands in minutes, not hours
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:
- ‘Pay bands’
- ‘Pay ranges’
- ‘Salary ranges’
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.
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.
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.
- It helps guide conversations with new hires by showing them their potential starting point within the band, typically between the minimum and midpoint. For internal moves or transfers, the bands provide guardrails while allowing flexibility to start higher in the range based on experience and expertise.
3 essential building blocks for salary bands
1. A 'common language' aka 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.
2. Relevant and reliable market data
This could come from various sources such as ‘Give to get’ salary benchmarking providers like Radford, Figures, Pave, Mercer, Ravio, Figures, job boards, recruitment surveys, and not forgetting your recruitment team who speak to candidates every day!
3. A compensation philosophy
Your North star for making comp decisions. How competitive will you be in the market? Will you set the same market position for all of your roles? How will you pay in different locations? How wide will you set your salary bands? Do you want your salary bands to overlap between levels or not? Lots of decisions to make here 🙂
With these three elements in place, you're ready to determine the salary figures for each level, track, and role in your organisation and construct your salary bands.
How to use the spreadsheet
I’ve built salary bands for 70+ organisations and I've compiled the 6️⃣ most common salary band models into a single spreadsheet.
These models offer
- ✅ Instant salary band creation from a single data point
- ✅ Comprehensive salary structure generation across all levels
- ✅ Logical progression for inconsistent market data
- ✅ Accurate gap-filling when market data is incomplete
A quick note about the models
- The model you select typically depends on the amount of market data available for a specific role.
- You have the flexibility to use different models for various teams; you don’t have to use the same model across the entire organisation.
- This spreadsheet is designed to function exclusively in Google Sheets. I don’t support Excel at the moment.
The models in detail
Key compensation formulas explained
Explore the industry-standard HR formulas used in this spreadsheet to calculate salary bands, including the pay range spread formula detailed below.
Top tips for designing your salary bands
Here are essential tips for crafting effective salary bands. Learn how to set competitive midpoints, determine optimal band widths, and choose between stepped or overlapping structures to support your organisation's compensation strategy.
Bonus: Global pay converter
If you employ people in more than one country, you'll probably want to convert the salary bands into different currencies and cost of labour rates.
The sheet called ‘Location salary band converter 🌍’ allows you to do just that. By entering details such as the currency and location differential (i.e. the differences in cost of labour vs your baseline market), you can quickly convert your salary bands, ensuring equitable compensation across different regions.
FAQs
There are 3️⃣ ways that I can help you
Whether you’re unsure where to begin or you have some comp ‘stuff’ in place but lack confidence, book some time to chat it through with me.
If you’ve downloaded a template and would like help customising it, then you can book in a FREE 30min session with me as a jumpstart to using it.
This website was built without code using Notion + Super ⚡️ by Alistair
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