Contrast pay ranges and grades with bands. Why would use either?

Does their use assist or

hinder the achievement of internal alignment? External competitiveness?

Understanding pay scales and schedules can be rugged. There are three main types of pay scales.
"Salary ranges help employers control their pay expenses and ensure pay equity among
employees. It is critical that employers have rational explanations for why they pay their
employees a certain rate, and defined salary ranges help accomplish that" (SHRM, 2019).

Pay Ranges: A salary range is a basic structure that defines the scope of salary an employee can
expect when working in a specific position within a particular industry. Pay ranges generally
range from low, medium, and high.

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Pay grades: A pay grade defines how much a professional can earn as they move forward in their

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career. Pay grade is often based on profession and experience. Government agencies often use

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pay grades to determine how much they will pay employees in specific positions.

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Pay Bands: Pay bands are similar to pay grades. Pay bands use a technique that fuses two or
three pay grades together instead of instead of defining salary at different levels. A pay band is
sometimes used to determine the range of Compensation given for certain roles. The range is
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based on specifics like location, experience, or seniority.

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Pay ranges are beneficial and assist the achievement of internal alignment and external
competitiveness. "Whatever structure you land on, remember that the most important step is
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communicating with employees. Let them know what you decide about how to align your pay to
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your organizational goals"(Herner, 2017). Salary ranges allow management to evaluate external
market pressures in reference to Compensation as well as manage employee's skills, experience,
and performance. Pay grades give employers the opportunity to increase Compensation as
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employees advance within an organization, ultimately giving them an incentive to stay with the
company. Pay bands are also beneficial. Pay bands allow management to distribute responsibility
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evenly. It also opens up the door to redesign a limited organizational structure. Pay bands convey
external competitive demands while promoting cross-functional orientation. Pay bands make it
possible to downsize a company by merely increasing employee's responsibilities."
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Compensation rarely remains static. The rate of pay is constantly changing with external market
and economic activity" (SHRM, 2019).

References

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 Herner, M. (2017, May 8). Which Compensation Structure Is Right for Your Company?
Retrieved November 03, 2020, from https://www.payscale.com/compensation-
today/2017/05/compensation-structure-right-company (Links to an external site.)

SHRM. (2019, August 16). How to Establish Salary Ranges. Retrieved November 03, 2020,
from https://www.shrm.org/resourcesandtools/tools-and-samples/how-to-
guides/pages/howtoestablishsalaryranges.aspx

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