Assess & Create Pay Bands
Support organizational strategy with well structured pay bands.
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Last Revised: May 4, 2011
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- Battling for talent in an increasingly competitive world while balancing labor spend is a challenge for all organizations.
- Organizations have the opportunity to create balance and maintain their desired competitive position with well-structured pay bands.
- Pay bands will be slightly different for all organizations, but the manner in which they are constructed and applied is built on a foundation of commonalities.
- Understand the organizational characteristics that would warrant a pay band system, and if you deem one appropriate for your organization, choose the construction type and application method that will best suit it.
- Pay bands apply rigidity and control to a salary structure – adjust the level of flexibility to suit the needs and culture of your organization.
- Organizations with high or low retention or job offer acceptance, or with an inequitable salary assignment (either real or perceived) need to consider implementing a new pay band structure.
- The costs and consequences of a poor pay band structure tax the workforce with unnecessary burdens (dissatisfaction with pay) and shave real dollars off the bottom line.
- Creating pay bands internally is a manageable task when you have a comprehensive process to follow.
Impact and Result
- Learn the value of pay bands in supporting organizational strategy.
- Evaluate and select a best-fit pay band structure to increase the efficiency and effectiveness of the current salary structure.
- Create pay bands to maximize labor spend.
Get to Action
Assess pay bands
Create a structure that supports organizational strategy.
Evaluate different types of pay bands
Choose a structure that best suits your organization.
Create a pay philosophy
Make compensation decisions that lead in the right direction.
Calculate the costs of transitioning to a new pay band structure
Test the feasibility and needed time frame to make a complete transformation.
Update organizational compensation policy
Reflect the changes that pay bands incur.
Related Solution Sets
Companies Who Helped
- Seven in-depth interviews with HR leaders, line of business managers, and executives to learn about their practices and philosophies surrounding pay bands.
- A ten-question survey to better understand the strategy and uses of pay bands among different organizations. The survey attracted 78 respondents.