Market-Based Salary Band Template

Decide first what you're paying against: employers your size, in the places your people work, at a stated percentile. Unless you have a reason to lead or lag the market, target the median (the 50th percentile). Compare base pay with base pay, and keep bonuses separate.

A purchased salary survey defines each job in a short paragraph and reports pay by company size and location. If you can't buy one, the Bureau of Labor Statistics publishes free wage estimates for about 830 occupations¹, nationally and for states and metro areas. Its occupations are broad, so expect fewer close matches. Treat salary websites as a cross-check only, since you can't see how they define a job.

For each of your jobs, read the survey's definition against what your people actually do, using a written job description where one exists. Titles mislead. In US equal pay law, the EEOC's regulations say that whether two jobs count as equal depends on actual job requirements and performance, not titles². Survey matching works the same way.

A quick test: read the survey definition aloud to someone in the job. If they would object to a clause, the match isn't exact, and their objection is the sentence to write down. Then give every match one of four grades.

Note how many employees sit behind each figure: a median from 150 people deserves less weight than one from 1,500.

Start with the survey median for the matched job. Survey data is months old by the time your bands take effect, so age it forward. The Bureau of Labor Statistics' Employment Cost Index shows private-industry wages and salaries rose 3.1% in the year to June 2026³. State the annual rate you use, and prorate it by month.

Next, apply the survey's own factor for each location, which reflects what employers there pay for the work. A cost-of-living index measures what it costs to live there, which is a different thing. Use the same range width in every team, so a position in band means the same thing everywhere. Here is one band, with made-up numbers:

1. 1

   Take the matched median

   The survey's 50th percentile for the matched job is $104,000, effective April 1, 2026.

2. 2

   Age it

   Bands start January 1, 2027, nine months later. At 3.1% a year, that adds 2.3%: $106,400.

3. 3

   Apply the location factor

   The survey puts this city at 0.94 of national pay, so the midpoint is $100,000, rounded.

4. 4

   Set the minimum and maximum

   At 85% and 115% of the midpoint, the band runs from $85,000 to $115,000.

Set the other levels' midpoints a stated percentage apart, unless the survey defines those levels too. If your levels aren't settled, define them first with a promotion criteria framework.

Show each person's base pay as a percentage of their band's midpoint, often called a compa-ratio: $92,000 against a $100,000 midpoint is 92%. Mark just three states: below the minimum, inside the band and above the maximum. Quartile labels and traffic-light colors get read as performance ratings.

Most people should land inside their band. For anyone below the minimum, split the list by match grade before you price it. A gap on an Exact or Adjacent band is real, so fund it on a dated timetable. A gap on a Constructed band may come from a bad match, so re-check the match first.

Never cut base pay to bring someone inside a band. If they're above the maximum after long service, hold their rate (red-circle it) until the band catches up, and record why. The EEOC's equal pay regulations describe red circle rates as higher than normal rates maintained for reasons unrelated to sex⁴. They can't be used to keep a sex-based gap in place. If the level is wrong, fix that instead.

Assume people will see your bands. In California, employers with 15 or more employees must put the pay scale in every job posting⁵. Any employer there must give an employee the scale for their own position on request. In the EU, the Pay Transparency Directive gives applicants a right to pay information before they're hired⁶. Member states had until June 7, 2026, to make it national law.

You can't stop people comparing notes, either. Under the National Labor Relations Act, employees have the right to discuss their wages with coworkers⁷, and the NLRB says policies that prohibit it are unlawful. So tell managers what each grade lets them claim, and never to call someone's own band confidential.

When someone brings a bigger number from a salary website, work through four checks with them, on paper:

• Is it base pay, or total pay including bonus?
• Which location does it cover?
• What size of company does it cover?
• Does the title mean the same work as theirs?

If a real gap remains, say so, add it to your list of corrections and give a date for an answer.

To set a new hire's pay, use the job offer letter and pay equity check, which compares the offer with what people in the job already earn. Or choose Edit with AI at the top of this page: River grades every match from your survey and job list before it shows a single salary.