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What Are Pay Bands?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 November 2016
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Pay bands are categories or levels of pay within a compensation system used by a governmental agency or business as the basis for determining the salaries paid to employees holding certain positions within the organization. A typical pay band will include several different pay levels in the overall structure, with the classification of the employee and the position involved influencing which of those levels is applicable in a given situation. It is not unusual for pay bands to include graduating pay grades for the same position, based on factors such as the employee’s term of service, educational credentials, and expertise with the responsibilities associated with the position.

The use of pay bands is common in many nations, including the United States and the United Kingdom. While the exact configuration of the bands will vary from one jurisdiction to another, most of these types of compensation plans will allow for a range of possible compensation based on the type of position involved and the assets that the actual employee brings to that position. For example, most pay band compensation structures will include an entry level that will include positions requiring relatively little training or advanced education, followed by a mid-grade band that will often include positions that require more training as well as educational credentials, and then finally an advanced grade that encompasses positions requiring a significant amount of education, experience, and expertise.

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A basic example of how pay bands function can be seen in the compensation structure used by a locally owned supermarket. One band encompassing entry-level positions may include the stock personnel who place goods on the supermarket shelves or the cleaners who make sure the store is kept in proper order for customers. A mid-grade band may include checkers and other personnel who handle the cash and credit transactions made by customers. Department and store managers would encompass a band that would be considered the executive grade. Within each of these bands, there may be a range of wages and salaries provided that take into account how long the employee has been with the supermarket, the level of competence exhibited in carrying out assigned tasks and even some difference in pay based on the complexity of those assigned tasks.

Many national as well as state and local governments also make use of pay bands as a way to create some structure and guidelines for setting the wages and salaries of each individual working for the organization. Depending on the structure of employment laws within a given jurisdiction, there may be very little in the way of discretion on the part of a manager to determine which level within a band applied to a certain employee. Other pay bands are more of a blend of subjective evaluation on the part of a manager and the parameters set by the compensation plan, making it possible for the manager to reward one employee who has performed well in the workplace without having to also extend a raise to a second employee with a similar position whose work quality has been average at best.

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