The Reasons Organizations Develop Salary Bands

With more than 20 years of professional human resources experience, Victor Melendez currently works for International Consulting Associates in Los Angeles as an executive HR consultant. He has held management positions in diverse industries, including manufacturing, technology, and healthcare. Within these roles, Victor Melendez cultivated experience in various aspects of human resources, including conducting salary band analysis on a regional and national scale.

Salary bands, or pay bands, consist of organized systems of compensation that base employee rewards on specified criteria developed by the company or government agency. They are the mechanism employers use to implement their compensation philosophies. Pay bands are a reward structure for employees during the duration of their employment in particular positions. They take into account level of responsibility as well as experience and education. In constructing pay bands, human resources managers research job pricing to define a rate range and establish a minimum and maximum salary compensation level for positions within a job category. A mid-point rate reflects the actual compensation an employee can expect with the stated qualifications.

Salary bands control an organization’s salary decisions with a consistent set of rules. They provide a tool employers use to ensure employees receive equal salary opportunities, thus lessening the risk of salary discrimination charges. Additionally, they serve as an excellent mechanism for controlling salary expenses and staying within budget.