Before getting into how you should build your salary bands, let's talk about why.
There are plenty of positive upsides that you should consider and can use as a rationale to start the project and get your leadership team and managers onboard!
Promote transparency and fairness
Transparency is a hot topic at the moment. While lots of companies would like to be more transparent on compensation, it’s not that easy to do so when your compensation strategy and decisions are blurry, inconsistent, or arbitrary.
Having salary bands in place brings a supporting framework that will,
Enforce fairness
You may have to explain any salary discrepancies/out-of-range positioning, which will likely force you to avoid most exceptions/unjustified inequalities (gender-based notably). Eventually, it should help you avoid potential biases.
Smoother compensation discussion
With a clear framework and system, candidates and employees will be more likely to understand and accept pay decisions, as a system is reassuring and ensures fairness. It should result in smoother communications, focusing on what matters (facts leading to the compensation decisions, such as performance or behavior) rather than challenging the data source or calculation method.
Attract, retain and engage
We all know this infamous HR tryptic goal, and all means to get to it is to be cherished!
A clear compensation strategy, including salary bands, is a great way to get there:
Provide clear career progression to your team
With salary bands, everyone should:
Understand why they are paid what they are paid
Project themselves in their future roles and evolution
It should help you manage expectations, spend less time on hypothetical discussions, and, once again, focus on what’s essential: personal growth and development.
Make pay management more efficient
All processes, including pay management, can be fastidious and complicated; the more it will be structured and standardized, the easier it will be to go through.
Compensation decisions made easy
No need to spend endless hours explaining how you’ve built an offer or explain there is no possible negotiation. A clear framework and process into which everyone falls should eventually lead to more structured, fair, and simple decisions for managers, TA, and HR. Not to mention that if you don’t have structure, every individual discussion starts from scratch when salary bands are setting the foundation for a given period, allowing to delegate decisions to Talent Acquisition, HR development teams, or even Managers directly. As long as they fit in the bands, it should be fair and consistent across the board.
Ease budget definition
Relying on your salary bands, budget planning based on your hiring plan should be more straightforward and reliable