Set salary bands that stay competitive

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that want clear, fair pay without title inflation.

The quick answer

Group roles into families and levels. Pick a market data source and a target percentile by role. Set a band width that allows growth inside the role without title inflation. Add location rules and a yearly review cadence. Share a short guide so managers use bands the same way.

The method in seven steps

Define role families and levels
Create families such as sales, operations, engineering, finance, people, and marketing. Use levels such as associate, senior, lead, and manager.
Choose market data and percentiles
Select one trusted data set for your region and industry. Pick a target percentile for each family based on scarcity and impact. For example seventy fifth for engineering and product. Fiftieth to sixtieth for operations.
Set band widths
Use a range wide enough for growth inside the role. Common bands are from eighty to one hundred and twenty percent of the midpoint. Keep overlap between levels to ease progression.
Add location rules
Create zones if you hire in multiple regions. Publish how a zone affects the midpoint. For example Zone A at one hundred percent and Zone B at ninety five percent.
Write movement rules
Increase pay within the band for performance and for sustained scope growth. Move to the next level only when responsibilities change, not only when pay reaches the top of the band.
Publish a short manager guide
One or two pages that cover data source, percentiles, band widths, zones, and examples of increases. Include a simple request form.
Run a yearly refresh
Refresh bands when new data arrives. Review compression, pay equity, and internal exceptions. Share changes with managers before review season.

Example

A company at fifteen million launched bands for six families with a single data source and two zones. Pay conversations became faster and title pressure dropped because managers could reward growth inside bands.

Pitfalls and fixes

Many data sources that conflict. Choose one and stick to it.
Bands that are too narrow. Give room to grow without a title change.
Hidden exceptions. Track and review them each quarter.

Checklist

Families and levels defined
Data source and percentiles chosen
Band widths and location zones set
Manager guide published
Yearly refresh on the calendar