How Should I Structure Grading in Our Growing IT Company: Department-Wise or Unified?

I am in the process of realigning the office grading structure for an IT software company. I am wondering if it is correct to have a department-wise grading structure or if I would require to work out one single banding structure across the company.

Earlier, my company had a few designations assigned to the grades, but now, as we are growing, I am required to add more designations and realign the grading structure.

Sub-Grades Structure

Also, does each grade (e.g., Grade E) require the same number of sub-grades? For example, should Grade E (executive level), Grade M (managerial level), Grade L (leadership level), etc., have an equal number of sub-grades like E1, E2, E3 then M1, M2, M3, Grade L1, L2, and so on? Or is it okay if we have Grade E1, E2, E3 and M1, M2, M3, M4, M5, and L1, L2, L3? In the middle level, there are more designations and pay scales that we would like to band separately.

Department-wise Banding Structure

I understand that grades are banded based on salary/pay scales, which is why I am looking to understand if, since in an IT company, the Technical/Development departments are the highest paid compared to support/HR/Admin/Finance teams, a department-wise banding structure can work.

I have attached the file for review and better understanding.

Looking forward to your kind advice and comments.

Thanks!

I would sincerely appreciate your kind advice and guidance on this, as it is important for me to finalize the grading matrix for my company.

Regards,

I am not aware if you have done a proper job evaluation before deciding on grades because that would have made assigning jobs to grades a lot easier for you. Having said that, you need to understand that grading is nothing but a tool for fairly compensating employees and managing the payroll.

Grading Structure Considerations

There is no need to have a complex grading structure. I am personally in favor of having a single grading system for the whole organization and not for separate departments. This is because you will have ease in slotting jobs, and your system will be transparent. For example, you may have a VP of HR and a VP of Projects. Even if these two may not have a reporting relationship, in the case of a single structure, they will clearly be aware of where they stand vis-a-vis each other in terms of hierarchy. In the case of a department-wise grading structure, that will be ambiguous.

Benefits of Sub-Grades

The idea of having sub-grades is very useful because salary grades are extremely fluctuating, and sub-bands give you a wider salary range.

Managing Grading Systems

You need to keep in mind that there are not a lot of rules for the grading system. Since the grading system is linked to salary, which is an emotional subject, there are bound to be disputes. The problem seldom lies with the grading structure; it is almost always good management practice. Make sure that you slot jobs to grades in a transparent, equitable, and open manner. Having some kind of appeal process for ambiguity also goes a long way in avoiding disputes.

Regards.