Salary Bands for SMEs: Structure Without Bureaucracy

Pay at a small company usually starts sensibly. The founder knows everyone, pays what feels right, adjusts when someone is clearly underpaid. It works for years.

Then two people compare numbers over lunch, and you discover that the person who negotiated hardest three years ago earns more than the person who has been carrying the team since. There is no good answer to that in the moment. Bands are how you avoid needing one.

Build from roles, not from people

The instinct is to look at what everyone currently earns and draw lines around it. That just encodes the existing accidents.

Start from the roles instead. Four or five levels is plenty at forty people. Something like: learning the job, doing the job independently, doing it well and helping others, owning an area, running a function. Write one paragraph per level describing what someone at that level actually does, then put a range on it.

Only after that do you map real people onto the levels. That is when the gaps become visible, and some of them will be uncomfortable.

Make the ranges wide

A range that spans twenty to thirty percent gives you somewhere to put a strong performer without promoting them into a job they do not want. Narrow bands create pressure to invent titles, and a company of forty with eleven job titles has a different problem.

Where you place someone inside the range should reflect how they are performing now, not how long they have been there. Otherwise the band is just a seniority ladder wearing a new name.

Decide how open you are going to be

You do not have to publish everyone’s salary. But you should be able to tell any employee which band they are in, what the range is, and what moving up requires.

A band structure that exists only in the founder’s spreadsheet delivers none of the benefit. The whole value is that people stop guessing, and they only stop guessing if somebody tells them.

Review once a year, not per request

Fix a month, review all salaries together, and make out-of-cycle changes rare and explainable. Reviewing pay whenever someone asks rewards the people willing to ask, who are not reliably the people doing the best work.

One caveat: if the market moves sharply for a particular role, an annual cycle is too slow. Vietnamese tech and accounting salaries have both done this in the last few years. When it happens, adjust the band, not just the one person, or you have quietly created the same problem again.

TalentHR keeps the band, the current salary and the review date on the employee record, so the annual cycle is a report you run instead of a spreadsheet you rebuild. Not exciting, but it is the reason the structure survives past year two.