Salary bands: how to build pay ranges that hold up to scrutiny

Salary bands — also called pay bands or pay ranges — define the minimum, midpoint and maximum salary for each level of role in a company. They replace case-by-case pay decisions with a structure: similar roles at similar levels are paid within the same range, and the reasons for placing someone high or low in that range are explicit. Salary bands matter more every year, because pay transparency rules increasingly require employers to publish ranges in job adverts and justify differences between people doing equivalent work.

How to build salary bands in six steps

1. Group roles into job families (engineering, sales, operations) and levels based on scope and responsibility, not job titles.
2. Collect market data for benchmark roles through salary benchmarking: surveys, reputable data providers, and recent offers.
3. Choose your market position — paying at the median, above it for hard-to-hire roles, or below it with other compensation.
4. Set each band's midpoint at that market position, then set the minimum and maximum around it.
5. Check that consecutive levels overlap sensibly, so a promotion is a real step but a strong performer is not capped too early.
6. Place every current employee in their band and review who falls below the minimum or above the maximum.

How wide should salary bands be?

• Entry and junior levels: around 20–30% spread from minimum to maximum.
• Professional and mid-level roles: around 30–50%.
• Senior and executive roles: 50% or more, reflecting a wider range of scope and impact.
• Overlap between adjacent levels of 20–40% is common and allows for growth without forced promotions.

Report compa-ratio — salary divided by band midpoint — for every employee. It shows at a glance who is underpaid for their level, and it is the first number to check when a pay equity question arises.

People outside their salary bands

Introducing salary bands always reveals people paid below the minimum or above the maximum. Below-band salaries should be brought up to the minimum on a published timeline, prioritised by the size of the gap. Above-band salaries are usually "red-circled": the person keeps their pay but receives smaller or no increases until the band catches up, and the reason is documented. Hiding either group defeats the point of the exercise and creates exactly the unexplained differences that pay transparency law targets.

Ettex Sheets is a practical home for the structure while the company is small enough not to need a compensation platform: one tab for levels and bands, one for market data, and an employee view that calculates each person's position in band and compa-ratio. The same bands then drive the annual compensation review and the cost side of headcount planning, so pay decisions and budgets use one set of numbers.