Banding (Salary Banding)

Definition

A compensation system where jobs are grouped into salary ranges or 'bands,' theoretically ensuring fairness but often creating pay inequality disputes.

Example Usage

Our new salary banding structure places senior engineers in Band 5, which ranges from $140K to $200K depending on experience and performance.

Origin

Developed in the 1980s as a structured approach to pay equity.

Fun Fact

Salary banding was supposed to fix pay discrimination, but it sometimes creates new problems when people discover the wide ranges and wonder why their peer earns $50K more.

Source: Compensation strategy terminology

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