Design of salary bands and structures

Defining minimums, maximums, midpoints and overlaps

Once the degrees of complexity have been shaped, the institution must assign each stratum a monetary pay range, commonly referred to as a salary band.

This band is not a rigid number, but an economic corridor delimited by a lower threshold and an upper ceiling.

The minimum income is reserved for fresh talent that has yet to master the minutiae of the position, while the upper cap rewards veterans with historically dazzling performance.

The mathematical heart of this scheme is the midpoint, which represents the ideal rate that the company considers fair for a fully capable employee.

It is smart practice to design these bands with margins of overlap between consecutive grades.

This means that the maximum salary at a lower level will be slightly higher than the minimum salary at the next higher level.

This strategic overlap allows a star professional to be financially rewarded in his or her current position, without the hasty obligation to promote him or her to a management position for which he or she may not yet possess the leadership maturity truly required.

Narrow versus broad bands for mobility

The monetary width of these bands drastically defines the company's internal progression model.

Corporations with very strong pyramidal hierarchies tend to opt for multiple, extremely narrow grades.

In these highly traditional environments, the salary margins are short and the only way to receive a significant economic increase is to achieve a formal promotion to the next box on the hierarchical organization chart.

In contrast, modern organizations that favor innovation and horizontal structures implement the concept of broad bands.

This scheme merges several former ranks into a single gigantic band covering a very wide salary dispersion.

For example, in a digital animation studio, an illustrator can double his income over the years while remaining in his same technical position, simply by demonstrating continuous improvement of his visual skills.

Broad bands give operational managers enormous freedom to reward learning new skills, fostering a cu