How Small Businesses Can Build Salary Bands and Practice Pay Transparency

Jaye Johnson
Aug 24
2 min read

Learn a step-by-step method to build salary bands, address internal equity, and communicate pay ranges with confidence.

The business case

Salary bands reduce guesswork, speed up hiring, and prevent pay gaps. Pay transparency improves trust and candidate quality - and actually complies with the law. You need both for your small business, and here's where to start.

The most common mistake I see is setting pay one offer at a time. It feels flexible, but it creates hidden pay gaps and endless exceptions, that can even get tricky legally. As a Total Rewards leader and consultant, I’ve rebuilt many systems that started off using that flawed pattern. The fix is a basic framework you can run every year - clear levels, clean ranges, and consistent messaging.

Follow the steps below to create salary bands, align titles, and share ranges the right way.

Step 1: Gather clean inputs

Employee list with titles, location, base pay, and hire date.
Updated job descriptions with core responsibilities and scope of the role.

Step 2: Group jobs by level

Create a simple leveling framework:

Level 1. Entry - Learns the role with guidance from more senior team members or management.
Level 2. Proficient - Works independently.
Level 3. Senior - Leads projects.
Level 4. Manager - Leads people or larger scope.

Place each job at a level based on impact and decision-making rights, not years of experience.

Step 3: Build ranges that fit your market and budget

For each level:

Source relevant market data for each role. Use the same source of data across jobs where possible.
Pick a midpoint that reflects your market aim.
Set the minimum at 80 to 85 percent of midpoint.
Set the maximum at 115 to 120 percent of midpoint.

Example. If the midpoint for Level 2 is 80,000, the range is 64,000 to 96,000. This gives room for growth without runaway costs.

Step 4: Map employees, then fix outliers with a phased approach plan

Calculate each person’s compa-ratio - Base pay divided by range midpoint.
Target most employees between 0.85 and 1.15 (85% - 115%)
Create a phased approached plan to correct anyone far outside the band. Do not reduce base pay. Use future increases to realign.

Step 5: Publish ranges and train managers

Include pay ranges in job postings.
Give managers a one-page guide on offers and increases.
Use consistent talking points - Why this range. How growth happens. What performance earns.

Step 6: Maintain bands with a light annual process

Update market data each year.
Adjust ranges if your midpoint drifts more than 3 to 5 percent.
Audit internal equity twice a year. Look for patterns by level, job family, gender, and protected classes.

Offers and promotions that stay within guardrails

Entry offers should land between 0.85 and 1.0 of midpoint.
Experienced hires can stretch to 1.05 when skills are proven.
Promotions should include a meaningful increase aligned to the new band. For example, 8 to 12 percent.

Turn Insights Into Action

If you want salary bands and manager guides ready in weeks, The Avoir Company’s Compensation Framework Package delivers ranges, leveling, and implementation steps you can run. Ready to roll this out with expert support? Visit the Services page to choose a package and get started today: View Services.