Written by Salary.com Staff
March 28, 2024
Making sure employees are paid fairly is important to keep the best people on your team. One way to do this is by setting up pay ranges called compensation bands.
In this article, discover how to create these bands using real-time data from the job market. Stay flexible and remain relevant in today’s fast-changing job world through this guide.
Compensation bands serve as the framework that helps organizations set competitive salary ranges for various job positions. Within these bands, two key components come into play: midpoints and levels. The midpoint represents the average salary for a particular position, while levels categorize jobs based on their complexity and responsibility.
Job families are critical elements in constructing compensation bands. They group together roles with similar skill sets and responsibilities, ensuring that each role within a family is fairly and equitably compensated. This step lays the foundation for a systematic and organized compensation structure within an organization. It provides a framework for HR professionals to effectively manage and administer compensation plans, contributing to the organization’s overall success and stability.
Choosing the appropriate compensation bands involves considering several factors.
The compensation band’s width is another crucial aspect to consider. This is where the concept of percentile and band width comes into play. Percentiles define the position of a salary within the market, and band width determines the range of salaries within a specific band. Striking the right balance ensures that organizations remain competitive without overextending their budget.
Now that the groundwork has been laid, explore how organizations can practically build compensation bands. An all-in-one solution that leverages benchmarking datasets and compensation band products can streamline the process. This approach enables organizations to construct data-driven compensation bands with ease, ensuring that their salary structures are competitive and reflective of real-time market conditions.
Data is important in managing talent well. By figuring out the details such as midpoint, job levels, and using comprehensive data, companies can set pay that attracts and keeps great employees. Choosing the right band options, such as salary range and width, helps strike a balance between being competitive and managing costs.
Deciding on a single solution that mixes benchmarking data and compensation bands helps companies make smarter decisions using data. In today's fast-changing job market, having up-to-date insights is crucial. By doing this, companies can create pay ranges that keep current employees happy and attract new ones. This promotes a workplace where everyone feels they are fairly treated, and equitably paid.
Download our white paper to further understand how organizations across the country are using market data, internal analytics, and strategic communication to establish an equitable pay structure.