Grades and designations are mere words that describe some concepts that an organization holds as far as its Human Resource is concerned.
In common parlance, in HR, one should understand that a "designation" should be indicative of the function or the job that the holder is expected to perform, and a "grade" should describe the salary/wage, allowances, and other benefits, if any, that all occupants of the grade will be eligible to receive.
It can happen that one designation may cover a multiplicity of grades depending on either the seniority or competence of the individuals holding the designation, and it is also possible that there can be many designations to which the same grade may apply.
For example, the designation "Executive" may cover grades E-1, E-2, E-3, etc., and one grade, SS-1, may be applied to various designations like Peons, Drivers, Assistants, and so on.
The point to remember is that the hierarchy of both the grades and of designations represents, always, the order of significance the organization attaches to them.
Both have to be established in tune with the organization's philosophy, culture, capacity, and organization of work (i.e., functionalization) as well as the organization of employment (i.e., emolument structure and levels of significance to the organization).
I hope this reply clears your confusion about the words and the concepts. If it doesn't, raise further queries. I would be glad to respond!
Regards,
Samvedan
December 5, 2004