How Do I Create Salary Bands Like B1, B2, B3? Seeking Guidance from Experienced HRs

Dear Seniors,

My CEO has given me the challenging task of creating bands like B1, B2, B3, which will help in determining the salary and other facilities to be provided for a particular position. I am feeling clueless about it. Please help me in preparing the bands.

Regards,
Durga

First, create a list of total job positions in the organization.

Second, segregate them into job families as per occupational classifications - technical, administration, professional, etc.

Third, place them in order of importance and merit from most important to least important in vertical levels of jobs for placement into hierarchical grades.

Fourth, group them into clusters of jobs in a horizontal grade structure with a minimum to maximum salary spread, including minimum-mid-maximum salary ranges in each grade.

Then, designate those grades as A, B, C, D, or M1, M2, M3, or whatever you feel fits the grade structure.

Thank you, friend.

I need more clarity. Could you please help me understand with an example? Could you also explain if the breakup differs from band to band? For example, in the case of Band 1, the HRA was 50% of the basic, so is it 65% of basic in the case of Band 2? It would be wonderful and greatly appreciated if you could provide me with the format of the bands.

Please, help me, friend.

Regards,
Durga

Hi Durga,

Please provide me with more clarity and examples. If you have any formats available, it would be a great help if you could share them. Does the breakup differ from band to band? For example, HRA was 50% of Basic in Band 1; now in Band 2, it is 60% of Basic. Does this change happen? Please clarify, friend.

Regards,
Durga

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I don't know what is greater, B1 or B2, so it's difficult to say. As you move upward in salary grades, the percentage on basic calculation will proportionately increase.

For example:
- 50% of 10,000 = 5,000
- 65% of 12,000 = 7,800
- 70% of 15,000 = 10,500

You have to think of the total package as a benchmark for each position.

The first part will be guaranteed cash = basic + breakdown of allowances + incentives, etc. The second part will be the cost of benefits and perks.

Calculate the total cost to the company.

You have to break up the allowance on basic. For example:
- HRA = 30%
- Fuel Allowance = 15%
- Car Allowance = 12%
- Meal Allowance = 20%
- Medical Allowance = 20%
- Etc.

These should be well defined to calculate financial impact and measure the basic salary range spread in a particular grade, depending on the total percentage distribution allocable for various allowances as a share of the same pie. Plus, you have to calculate superannuation, provident fund, ESI, mediclaim, etc.

You can seek help from an accountant as it would be better because in this essay writing, it's difficult to exhibit some practicals.

First, try to understand the concept of total compensation, then break-up and salary grade structure.

BADLU

I am also interested in band optimization in my company. I did not separate it as a job family, but I classified it as a hierarchy role with maximum salary spread within minimum to medium-maximum salary range in each grade.

But I need to find out how I can show entry level and merit systems. For example, can a new hire be classified in the middle level or upper grade? Or does he have to stay at entry level regardless of whether he starts at entry level or not?

Thank you for your help from now on.

Best regards,

I am also interested in band optimization in my company. I did not separate it as a job family, but I classified it as a hierarchy role with maximum salary spread within minimum to medium-maximum salary range in each grade.

But I need to find out how I can show entry-level and merit systems. For example, can a new hire be classified in the middle level or upper grade? Or do they have to stay at the entry-level degree no matter if they start at entry-level or not?

Thanks for your help from now on.

Best regards,

I have created three levels:

1) Executive
- C1: 1.96-2.40 lac p.a
- C2: 2.4-2.7 lac p.a
- C3: 2.70-3.00 lac p.a

2) Manager
- B1: 2.50-3.50 lac p.a
- B2: 3.5-4.5 lac p.a
- B3: 4.5-5.5 lac p.a

3) GM & Above
- A1: 4.5-6.5 lac p.a
- A2: 6.5-8.5 lac p.a
- A3: 8.5-10 lac p.a & above

Please let me know if there are any mistakes.

Please correct me if I am going wrong.

I have divided all the employees into 3 levels:

C1 | C2 | C3
1) Executive (1.96-2.4 lac p.a) | (2.4-2.7 lac p.a) | (2.7-3.0 lac p.a)

B1 | B2 | B3
2) Manager (2.5-3.5 lac p.a) | (3.5-4.5 lac p.a) | (4.5-5.5 lac p.a)

A1 | A2 | A3
3) GM & Above (4.5-6.5 lac p.a) | (6.5-8.5 lac p.a) | (8.5-10 lac p.a & above)

This needs a policy statement for promotion. In case of promotion, an employee will be elevated to the next higher grade with some pay fixation formula. Work out overlapping and midpoint differentials.

Tell me the formula which is used to decide the band. Do we decide the band ourselves or is there a proper system or formula to do it? Help me, friends... please.

Why did you create a single, single multiple salary range? I mean, where does the maximum end and a new range begin? This tendency shows the compensation philosophy of your organization. People may not progress quickly, and if promoted, they will receive a very significant promotional increment because they will be jumping from a lower grade to the next higher grade on one scale directly.

Think on this...

Hello Sir,

Could you please explain how we can create a job family and how we can optimize our bands for using job families? Is the band system mainly concerned with salary?

Thank you,
Melek

Hi Durga,

I feel what you posted at the top might be good because in every department, the designation is the same from Executive to Manager, Senior Manager, Assistant Vice President (AVP), Vice President (VP), Director, etc. It would be better to follow one single method, either by providing salary ranges for each grade or going with the designation only. When the salary increases, the employee will move to the next grade that falls within that range.

Ravin

Please tell me how we decide the minimum and maximum amount of a particular band? Is there any formula or logic? Please explain with an example.

Regards,
Durga

Hi Friends,

My manager has also assigned me the same work "BANDING." This refers to the position of an employee in an organization (hope I am not wrong here). When I started to work on this, I came to know that there are two types of banding:

1. Career banding.
2. Employee banding.

Now, which one should I follow? Again, this banding also includes their experience and salaries. Can anyone differentiate between the above and guide me on how to proceed with this... :confused: