Pay Structure
Pay grade
Also called: salary grade, job grade, grade level
A grouping of jobs with similar internal value that share a single pay range.
Pay grades group jobs of similar internal value (scope, complexity, accountability) so they share one pay range. A typical organization has 10–30 pay grades spanning entry-level individual contributors through executive roles.
Pay grades simplify compensation administration: instead of managing 1,000 individual job ranges, you manage 20 grade ranges and assign jobs into them. They also support internal equity — two roles in the same grade should be paid comparably regardless of department.
Grades are usually assigned via a job-evaluation process (Hay points, market-based banding, or a hybrid) and are typically reviewed every 1–3 years as the organization changes.