What are Salary Bands? Structure, purpose, and governance
Salary bands define the minimum and maximum pay for roles or levels within an organization. They provide structure for offers, promotions, and adjustments, and are one of the most visible elements of compensation governance.
Why salary bands exist
Without bands, organizations rely on negotiation, exceptions, and subjective judgment. Bands introduce intentional ranges that support internal equity and consistent decision making as the organization scales.
Core attributes of salary bands
- Range Minimum — baseline for offers and internal placements.
- Range Maximum — upper boundary for the role or level.
- Midpoint — reference value for calibrated placement.
- Currency & Region — context for market comparability.
Placement logic and compa-ratio
Placement within a band is often expressed as a percentage of the midpoint. Midpoint-based placement makes decisions explainable and allows benchmarking without exposing individual salaries. This is where compa-ratio becomes useful.
Compa-ratio vs. range spread (RSP)
Compa-ratio describes an individual's position relative to the midpoint of a band, while range spread (RSP) describes the width of the band itself. Compa-ratio answers "where is this employee within the range?" and RSP answers "how wide is this range?". Both metrics support calibration and governance without exposing individual salaries.
How bands connect to compensation architecture
Bands do not exist in isolation. They depend on job architecture that defines families, roles, and levels. Without architecture, bands cannot scale or support transparency, because comparability across roles breaks down.
Related: What is Compensation Architecture?
Relevance for transparency and equity
The EU Pay Transparency Directive increases visibility into salary ranges and internal comparisons. Salary bands provide a structured way to communicate pay logic, identify pay disparities, and support equal value analysis.
Signals that salary bands are missing or outdated
- Offers are negotiated case by case
- Promotions rely on influence instead of structure
- Salary surveys do not map to internal roles
- Pay transparency becomes reactive instead of intentional
Conclusion
Salary bands support equity, structure, and governance. They are a key component of modern compensation architecture and are increasingly viewed as essential for transparency and explainability in mid-market organizations.