Salary banding is a human resources practice used to structure employee compensation within defined ranges. This approach helps organizations maintain equity and consistency in pay structures while accommodating varying levels of experience, responsibility, and performance. Salary bands are typically established by grouping roles with similar duties and qualifications into tiers, each with a minimum, midpoint, and maximum salary. For example, a company might create a salary band for the position of Marketing Manager with a range of $60,000 to $80,000. Within this band, entry-level managers might earn closer to $60,000, while those with more experience or additional responsibilities could earn up to $80,000.
By setting salary bands, organizations can streamline compensation decisions, ensure fair pay practices, and provide clear salary progression pathways for employees. This method also aids in budget planning and can enhance transparency in compensation practices.
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