A salary band is the range between a minimum and maximum amount a company will pay in wages for a certain role or job level. Within the range, companies can decide what salary to pay an employee based on the specific circumstances of the role or job evaluations.
Often also referred to as pay bands, salary bands define the value of a role based on the market externally and the internal value of the role to the organisation. They are used within teams and by HR departments for performance management and career development, and externally in recruitment.
Salary bands provide a framework for setting fair, consistent and transparent salaries. In this article, we will examine the benefits of using salary bands, explain how to determine and implement them, and provide some examples.
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Benefits of Salary Bands
Companies experience several benefits when they use salary bands:
- Fair and transparent pay
Salary bands help companies work towards pay equity by ensuring that pay for similar positions is consistent, fair, and transparent. By providing a framework, they reduce the chance of an individual manager’s unconscious bias being introduced into the process of deciding what is fair compensation for a role.
- Attracts talent
Including a salary range in a job advert or as part of the discussion with a potential candidate can encourage individuals to apply for a role as they are immediately aware of what they could get paid. Salary bands are useful ways to ensure you don’t waste time interviewing people who won’t take a role due to the salary, but they also set the tone with the candidate that the organisation is honest and open with its employees.
- Supports career development
Salary bands help employees understand their role in the wider organisational structure. This information lets managers and employees discuss performance, pay, career progression, and development opportunities.
- Streamlines the pay review process
Linked to career development, the existence of salary ranges and bands can simplify the pay review process by providing clear information on what an individual can expect to earn at their job level. Salary bands mean that both the employee and their manager know how much flexibility there is for pay rises.
- Helps set budgets
When companies know how much they will pay for specific roles, they can set budgets and keep to them more easily because there is less chance that the numbers involved will change significantly.
How Do Salary Bands Work?
Salary bands work by providing a minimum salary for a role and also a maximum one. Employees can be paid within this range. When thinking about salary bands, it’s worth noting:
- companies often aim to start new hires at the lower end of a salary band as it gives scope for pay progression
- salary bands can change over time
- not all companies will have the same salary bands for similar roles
How to Determine and Implement Salary Bands
Introducing salary bands to a business takes time and focus. The following steps will get you started:
- Ensure you have a comprehensive list of all the roles in the company with job descriptions.
- Research the market to know what companies within your sector pay for equivalent roles. HR benchmarking can help with this.
- Analyse each position to ensure you have the correct data on the skills required, responsibilities and any role-specific considerations such as geographic location, benefits packages or the wider contribution to the business.
- Collate the information to create salary bands with a minimum and maximum amount the company will pay for a specific role. Double-check how this information compares to the external market and any internal considerations such as roles at an equivalent level.
- Have a communication strategy for how, when and why you will share salary band information. Being as transparent as possible fosters trust, which helps employees to feel more valued.
- Regularly review the salary bands to ensure they are still fit for purpose.
- Use employee surveys to get information on how employees view their salaries, the bands and what they know about competitors and the wider market.
Examples of Salary Bands
Organisations with large numbers of employees often use salary bands. They are especially popular with employers in public services such as healthcare, education, and government administration.
Healthcare example
The NHS has bands from 2 to 9. For example, Band 3 currently equates to a salary of £22,816 for someone with less than two years of experience up to £24,336 for those with two years of experience. It applies to clinical support workers, therapy assistants, pharmacy assistants, administrative workers, and clerical staff.
Education example
The salary band for someone with qualified teacher status starts at £30,000 and goes up annually to a maximum of £46,525 for people outside London.
Frequently Asked Questions
Are salary bands the same as pay ranges?
Different firms use these terms in different ways. Both terms refer to a range paid for a specific role. Some companies use salary bands for grades of roles within the organisation’s hierachy and then pay ranges for the actual role within that grade. Other companies use salary and pay ranges interchangeably to indicate the overall minimum and maximum the company is prepared to pay for a role.
How do salary ranges equate to pay rates?
Pay rates are the amount someone is paid per hour, week, or month to perform their role. Salary ranges help determine pay rates.
Can salary bands overlap?
Yes, overlap can be beneficial as it allows companies to increase an individual’s pay incrementally without changing the pay band completely. For example, an individual may be within one salary band where the maximum is above the minimum for the next level up. The individual may not be ready for promotion to the next level, but their current salary band gives the company flexibility to give them a pay rise.
How often should salary bands be reviewed?
Salary bands should be reviewed at least once a year to ensure that company salaries keep up with market changes.
