1. Anatomy of a Salary Grade

A structured pay scale isn’t just a list of numbers; it’s a mathematical framework designed to balance market competitiveness with internal equity. Here is how the components work: • The Midpoint (100%): This represents the "Market Rate." It is what a fully competent employee performing all aspects of the job should expect to earn.

• The Minimum (80%): This is the entry point for the grade, typically reserved for those new to the role or still developing the necessary skills.

• The Maximum (120%): This is the "ceiling" for the grade, reserved for high performers or those with significant tenure who consistently exceed expectations.

Example: A Sample Salary Structure

The table below illustrates a standard 6-tier hierarchy. Notice how the ranges overlap slightly, allowing for a smooth transition as an employee is promoted from one grade to the next.

Grade	Job Level Example	Min (80%)	Midpoint (100%)	Max (120%)
G10	Head of / Executive	$128,800	$161,000	$193,200
G09	Director / Lead	$112,000	$140,000	$168,000
G08	Senior Manager	$97,400	$121,700	$146,000
G07	Manager / Specialist	$84,700	$105,900	$127,100
G06	Senior Associate	$73,600	$92,000	$110,400
G05	Associate / Entry	$64,000	$80,000	$96,000

2. Technical Engineering Observations

The "Internal Parity" Check

In this model, the Max of G05 ($96,000) is actually higher than the Midpoint of G06 ($92,000). • Technical Significance: This confirms a "Heavy Overlap" (approx. 50% of the range). • Process Application: You can reward a high-performing Associate (G05) more than a new, unproven Senior Associate (G06). This prevents "promotion hunger" where people chase titles just to get a pay bump, as they still have "runway" in their current grade.

3. Execution: The "Green Circle" Audit

By raising the G05 Midpoint to $80,000, your Minimum is now $64,000. • The Process: You must run a "Green Circle" audit immediately. Any employee currently paid below $64,000 is now "out of compliance" with your framework. • Technical Action: These employees should be moved to the $64,000 minimum as a "market adjustment," separate from their annual performance merit increase.

4. Merit Allocation with the New Midpoint

To manage your budget, use the Compa-Ratio ($Actual / New Midpoint$). Scenario: An employee earns $82,000 in G05. • Old Framework (70k Midpoint): Compa-Ratio was 117% (Highly paid). • New Framework (80k Midpoint): Compa-Ratio is now 102.5% (Market average). • Impact: This employee now has more "room" to receive a higher percentage increase than they would have under the previous model.

Why This Structure Matters

1. Internal Equity

When two people are doing the same level of work (e.g., both are G07 Managers), their pay should fall within the same range. This structure prevents "negotiation bias," where the person who asks for more gets significantly more, regardless of merit.

2. Career Pathing

Employees want to know what’s next. A visible architecture shows an Associate at G05 exactly what the financial jump looks like to reach G06. It transforms "getting a raise" from a mystery into a milestone.

3. Budget Predictability

For Finance and HR teams, having set ranges makes it easier to forecast labor costs. It prevents "salary creep," where individual pay outpaces the value the role brings to the market.

4. Market Competitiveness

By pegging the Midpoint to current market data, companies ensure they aren't losing top talent to competitors while also ensuring they aren't overpaying and threatening the company's sustainability.

Conclusion

A structured salary architecture is more than just an HR tool—it is a statement of company values. It tells your team that you value fairness, transparency, and professional growth. When employees understand the "why" behind their paycheck, they are more likely to stay engaged and focused on reaching the next level.