How to Build Salary Bands to Ensure Equitable Pay in the Workplace

Salary bands are a critical component in ensuring equitable pay in the workplace. They provide a structured framework for compensation, ensuring that employees are paid right based on their role, experience, and performance. As organizations increasingly recognize the imperative of cultivating diverse and inclusive environments, building an effective salary band structure becomes essential.

This guide will take you through the basics of creating equitable salary bands, explaining how they work, providing examples, and highlighting their differences from pay scales. We'll also discuss the benefits of using salary bands for your organization and how Salary.com's Pay Equity can assist you in the process.

What is a Pay Band?

A salary band is a structured system that organizations use to determine the range of compensation for specific job roles. It establishes a minimum and maximum salary for each pay band, ensuring consistency and fairness in compensation practices.

Pay bands are typically based on factors such as:

• Job level. The level of responsibility, complexity, and impact of the position.

• Experience. The years of experience required for the role.

• Education. The educational qualifications necessary for the position.

• Location. The geographic location where the job is based.

• Performance. The employee's individual performance and contributions.

So how do salary bands work? Pay bands are a way for organizations to categorize and structure compensation for different job roles. These bands, often labeled with letters or numbers (such as Band A, B, or C), group jobs based on factors like responsibilities, skills, and experience.

Each band has a specified salary range, with a minimum and maximum. Employees are then assigned to a particular band depending on their qualifications and job requirements. The salary within a band can vary, with factors like experience and performance influencing individual pay.

This approach provides a framework for fair and consistent compensation, which allows for flexibility while maintaining a structured approach to pay within the organization.

Salary Bands vs. Pay Scales

Salary bands and pay scales are both tools used by organizations to structure and manage employee compensation, but they have some key differences.

Pay bands typically group jobs based on factors like responsibilities, skills, and experience, assigning a range of salaries to each band. This approach allows for flexibility within a defined framework.

On the other hand, pay scales outline specific salary levels or grades associated with individual positions, often with predetermined steps or increments for salary progression. While salary bands offer more flexibility, pay scales provide a more structured and uniform approach to compensation.

Salary Band Examples

The table below illustrates the General Schedule payscale, a hybrid salary banding system provided by the federal government. These salary bands encompass 15 grades, with higher grades indicating greater levels of responsibility and pay.

Each grade specifies education requirements and job responsibilities, and there are 10 steps within each grade determined by factors such as seniority, length of service, or performance.

GS Grade	Step 1	Step 2	Step 3	Step 4	Step 5	Step 6	Step 7	Step 8	Step 9	Step 10
GS-1	$19,738	$20,400	$21,056	$21,709	$22,365	$22,749	$23,398	$24,052	$24,078	$24,690
GS-2	$22,194	$22,722	$23,457	$24,078	$24,349	$25,065	$25,781	$26,497	$27,213	$27,929
GS-3	$24,216	$25,023	$25,830	$26,637	$27,444	$28,251	$29,058	$29,865	$30,672	$31,479
GS-4	$27,184	$28,090	$28,996	$29,902	$30,808	$31,714	$32,620	$33,526	$34,432	$35,338
GS-5	$30,414	$31,428	$32,442	$33,456	$34,470	$35,484	$36,498	$37,512	$38,526	$39,540
GS-6	$33,903	$35,033	$36,163	$37,293	$38,423	$39,553	$40,683	$41,813	$42,943	$44,073
GS-7	$37,674	$38,930	$40,186	$41,442	$42,698	$43,954	$45,210	$46,486	$47,722	$48,978
GS-8	$41,723	$43,144	$44,505	$45,896	$47,287	$48,678	$50,069	$51,460	$52,851	$54,242
GS-9	$46,083	$47,619	$49,155	$50,691	$52,227	$53,763	$55,299	$56,835	$58,371	$59,907
GS-10	$50,748	$52,440	$54,132	$55,824	$57,516	$59,208	$60,900	$62,592	$64,284	$65,976
GS-11	$55,756	$57,615	$59,474	$61,333	$63,192	$65,051	$66,910	$68,769	$70,628	$72,487
GS-12	$66,829	$69,057	$71,285	$73,513	$75,741	$77,969	$80,197	$82,425	$84,653	$86,881
GS-13	$79,468	$82,117	$84,766	$87,415	$90,064	$92,713	$95,362	$98,011	$100,660	$103,309
GS-14	$93,907	$97,037	$100,167	$103,927	$106,427	$109,557	$112,687	$115,817	$118,947	$122,077
GS-15	$110,460	$114,142	$117,824	$121,506	$125,188	$128,870	$132,552	$136,234	$139,916	$143,598

For the 2023 General Schedule pay raise, the GS pay rates were increased by a total of 4.1% from 2022 to 2023.

The minimum salary for GS-1 is $20,999, and the maximum is $26,273.

The minimum salary for GS-2 is $23,612, and the maximum is $29,716.

The minimum salary for GS-3 is $25,764, and the maximum is $33,495.

The minimum salary for GS-4 is $28,921, and the maximum is $37,597.

The minimum salary for GS-5 is $32,357 and the maximum is $42,068.

The minimum salary for GS-6 is $36,070 and the maximum is $46,888.

The minimum salary for GS-7 is $40,082 and the maximum is $52,106.

The minimum salary for GS-8 is $44,389 and the maximum is $57,709.

The minimum salary for GS-9 is $49,028 and the maximum is $63,734.

The minimum salary for GS-10 is $53,990 and the maximum is $70,190.

The minimum salary for GS-11 is $59,319 and the maximum is $77,112.

The minimum salary for GS-12 is $71,099 and the maximum is $92,429.

The minimum salary for GS-13 is $84,546 and the maximum is $109,908.

The minimum salary for GS-14 is $99,908 and the maximum is $129,878.

The minimum salary for GS-15 is $117,518 and the maximum is $152,771.

Advantages of Using Salary Bands

Pay bands are a helpful tool for organizations. They offer several advantages:

• Consistency

  Salary bands ensure that employees performing similar roles receive similar compensation, promoting pay equity and reducing pay disparities. This helps in closing the gender pay gap and ensuring that employees with similar experience and qualifications are paid fairly.

• Fairness

  They provide a transparent and structured approach to determining salaries, making it easier for employees to understand their compensation and compare it to others within the organization. This transparency can help boost employee morale and trust in the organization's compensation practices.

• Flexibility

  Pay bands allow for variations in compensation within the pay band based on individual factors such as experience, performance, location, and specific skills or certifications. This flexibility allows organizations to reward high-performing employees and attract top talent with specialized skills.

• Benchmarking

  They help organizations compare their compensation practices to industry standards and benchmarks. This benchmarking can help ensure that the organization's compensation remains competitive and that it is attracting and retaining top talent.

• Budgeting and Cost Control

  Salary bands can help organizations manage their compensation costs by providing a framework for budgeting and forecasting. This can help ensure that the organization is making the most effective use of its financial resources.

• Consistency in Promotions and Career Progression

  Pay bands provide a clear framework for promoting employees and recognizing their career development. This consistency can help ensure that employees are fairly compensated as they progress within the organization.

• Reducing Bias in Compensation Decisions

  They can help reduce unconscious bias in compensation decisions by providing a structured and objective approach to setting salaries. This can help ensure that all employees are evaluated and compensated fairly, regardless of their gender, race, or other personal characteristics.

How to Build Salary Bands to Ensure Equitable Pay

Establishing these compensation bands involves a thoughtful and strategic approach, considering various factors such as job roles, experience levels, and performance metrics. Here's a step-by-step guide on how to construct salary bands to promote equitable pay in the workplace:

1. Step 1: Research the Market

   Begin the process by conducting comprehensive research, gathering data from diverse sources such as surveys, HR-aggregate market data, and occasionally self-reported employee data. This thorough approach aids in understanding salary differences across adjacent grades.

   With Salary.com's Pay Equity, you can effortlessly categorize comparable jobs, gather relevant compensation data, document job descriptions, and group roles for analysis across gender, ethnicity, race, and other protected classes.

2. Step 2: Consider Your Company’s Finances

   Move on to evaluating your company's financial standing, including a detailed examination of the budget and financial capabilities. This step ensures that the salary structure aligns seamlessly with the broader financial strategy of the organization.

   Using the Pay Equity Suite, you can formulate a strategy for pay adjustments considering your organization’s risk tolerance, culture, and budget. Understand the cost implications of closing pay gaps and target spending where it can have the most significant impact.

3. Step 3: Set The Salary Range

   Incorporate insights from market research and financial considerations to establish a robust pay structure. Take into account factors like geography, cost of living, seniority, and experience to create a comprehensive and fair salary range framework.

   You can also leverage the Reporting Library to utilize a collection of reports that can assist in identifying potential pay issues within your organization. This involves analyzing discrepancies based on protected classes, including gender, ethnicity, age, and more.

4. Step 4: Create Pay Bands

   Grouping jobs with similar responsibilities within defined salary ranges creates cohesive salary bands. Acknowledge the potential for overlap, which recognizes the nuanced value of various roles within the organization.

5. Step 5: Communicate The Salary Band to your Team

   Promote open communication by providing employees with a clear understanding of their salary bands. This transparency empowers them to make informed and equitable salary comparisons with colleagues in similar roles, promoting trust and satisfaction.

   

   Salary.com's Pay Equity ensures a consistent message on fair pay. Run a Total Compensation Statement for an overview of an employee's pay, including base pay, bonuses, and benefits like medical insurance, 401k, taxes, etc. This supports your commitment to transparent and equitable pay practices.

   Also, engaging with Salary.com in a Pay Equity Audit grants you a Certification, which demonstrates your commitment to fair pay through a comprehensive audit process.

6. Step 6: Monitor the Market

   After implementing the salary bands, stay proactive by regularly checking the market. Keep an eye on changes in industry standards, shifts in living costs, and other important factors. Updating your salary bands regularly helps your organization remain attractive and fair to employees. Regular reviews and adjustments are key to ensuring the continued success of your compensation strategy.