What is a Salary Band and How Can You Use It For An Equitable Workplace?
Compensation plays a vital role in every organization. Yet, it can be challenging to establish a system that meets the needs of both employees and employers. Women in businesses like you aim to foster an equitable workplace. But how do you create a fair and transparent employee compensation strategy to back that up?
One way to achieve that is by establishing salary bands, also called pay bands. In this article, we'll tell you what they are and how you can use them for your sustainable business.
What Are Salary Bands?
Salary bands are a range of salaries within which an organization defines the pay an employee receives based on their role. A role can have varying pay grades, with a minimum and a maximum depending on an employee's skills, experience level, and performance. This system can help businesses for good set and maintain compensation levels. Companies typically declare them openly to applicants, improving transparency in pay.
How Can You Use Salary Bands For An Equitable Workspace?
The primary use of salary bands is to improve pay equity in your company. However, it has other uses that help ensure fair compensation.
Allows You To Compensate Your Team Members Fairly
When you have a salary band in place, you can ensure that your team members receive appropriate compensation because you can compare their salaries to others within the same band. As a result, you can ensure everyone is being paid according to their experience and qualifications.
Helps You Attract And Retain Team Members Who Want To Make The World Better
Studies have shown that transparency is a significant factor that applicants consider when they go job hunting. When you have a salary band, you can use it to attract, hire, and retain like-minded employees. Offering competitive, transparent salaries lets you attract top talent. You'll be able to take care of current employees with the skills and desire to make a difference in the world.
Discrimination in pay has been a long-standing concern, notably the gender pay gap. Salary bands decrease discrimination primarily by increasing pay transparency. More importantly, it provides more information to employees about the pay they receive relative to their peers in similar roles, which helps them spot unjust pay differences. As businesses aiming to care for all stakeholders — employees included — ensuring fair pay is essential.
Sets An Expectation For New Hires
When you set up have salary bands, you set an expectation for new applicants. This way, they'll know what to expect regarding their compensation.
How Do You Create Salary Bands?
1. Research The Market
The first step is to research and gather market data. You'll need to find out what other businesses in your industry are paying for similar positions. This information will help you set a salary range that can compete with market rates.
2. Consider Your Company's Finances
The next step is to consider your company's finances. You'll need to make sure you can afford the pay grades within the salary range. Ensure balance between fair compensation and working toward your company's mission.
3. Set The Salary Range
Once you've considered market research and your company's finances, you'll be ready to set a pay structure. Make sure to leave room for negotiation. That will let you attract talented people who want to help you achieve your company’s mission.
4. Seek CFO Services
A virtual CFO can provide strategic business finance services to help you in this process. You can consult them to see if your plans are feasible. They can also help you create ranges for your salary bands to ensure a fair payment scheme within your company.
As a business for good, you may want to consider going for a CFO who shares the same purpose. That way, you ensure they have your mission's best interests at heart.
5. Communicate The Salary Band To Your Team
The last step is to communicate the pay ranges clearly to your team. Do it in a way that will allow them to understand the terms fully.
By following these steps, you can create salary bands that help establish a more equitable workplace.
Impact Businesses and Salary Bands
As a company aiming to use business for good, salary bands are invaluable for ensuring your employees receive the pay they deserve. Whether you're a small business or a large corporation, they provide employees a better understanding of your company's salary ranges and how it compares to the going market rate for similar jobs.
At Profit Reimagined, we want to help you realize your mission and vision. We understand the difficulties balancing sustainability, ethics, and impact and even taking care of your employees — but as you know, your team is the backbone of your impact business. We specialize in fractional CFO support, and as a B-Corp, we aim to deliver the best for ensuring equitable financial strategies within your company.