What’s a Salary Grid and Do I Need One?

One of the biggest expenses in a business is payroll. Having a structure to how you determine pay for each position is essential to not having out of control costs.

When salaries are determined on a whim, based on what they previously earned, or some other factor you can create inequities, poor morale, and damage your finances. Instead it needs to be based on your industry, your P&L, and where you want to stand.  What I mean by “where you want to stand” is do you want to be relation to the market – below, at, or above.  All three come with their own pros and cons, it’s important to understand each, the affect on your operations, and fit with your culture.

By creating a structure – without looking at who is currently in the role – you have a tool that will work for today and only need minor adjustments in the future. Take the time and effort now for ease later.

This structure is known by several names: Pay Scale, Salary Grid, or Pay Tables, it all means the same thing. Essentially you list a position with the minimum, midpoint and maximum of what you are willing to pay. Everyone in the position should fall within the range with the difference in salary being experience or years in the position.

Simple enough, right?

Well, let me throw one more variable in there to consider. You may have different departments – accounting, sales, marketing, operations, etc. You will need to look across departments to see if there is parity in similarly situated positions. For example, a coordinator in sales should be at the same level as the coordinator in marketing. Warning – not all will be this easy to correlate.

Now when someone new enters the organization or is promoted you have a guide as to what to pay them.

Need assistance putting all this together. We are happy to help, call (773.531.8199) or email ([email protected]) to discuss.