Salary Structure Design: From Job Architecture to Pay Bands

Why this research matters

A practitioner guide to building a legally defensible, internally equitable, and market-competitive salary structure - from job evaluation to grade design.

Why Ad Hoc Pay is a Strategic Liability

Most salary structures do not begin as structures. They begin as individual decisions - a hiring manager paid what was needed to secure a candidate, a counter-offer that locked in a high performer, a salary freeze that left others behind. Over time, these decisions accumulate into a pay landscape that is incoherent, legally risky, and deeply demoralising when employees compare notes. The result is pay that bears no relationship to either role value or individual contribution - and the highest attrition risk sits precisely among your most experienced and commercially aware employees, who are the first to identify and act on pay inequity.

Mercer's Global Pay Equity research (2024) shows that 77% of global organisations are now developing pay transparency strategies, driven by both regulatory pressure and talent market expectations. Yet only 14% have fully integrated these practices - revealing a significant gap between intent and execution. Building a salary structure is the foundational work that makes pay transparency possible.

Step 1: Job Evaluation - Establishing Internal Relative Value

Before benchmarking to market, you must first establish the relative value of roles internally. Job evaluation is the process of assessing each role against a common set of factors - typically: knowledge and skill requirements, problem-solving complexity, impact and accountability, and interpersonal demand - to produce a score that positions each role in a hierarchy of internal value. The most widely used job evaluation methodologies in the GCC and EMEA are point-factor schemes, such as Hay/Mercer's Job Measurement approach, Korn Ferry's Hay Guide Chart method, and Willis Towers Watson's Global Grading System.

Job evaluation does not determine pay - it determines the relative positioning of roles. A role that scores higher than another role should, all things being equal, be paid more. It is the mechanism that creates internal equity and provides the legal foundation for equal pay compliance.

Step 2: Grade Structure Design

Once roles are evaluated and scored, they are grouped into grades or bands - clusters of roles with similar evaluation scores that will be managed within a common salary range. The number of grades in a structure is a design choice with real consequences: too few grades produce broad bands that provide flexibility but reduce transparency; too many grades produce narrow ranges that feel more like steps on a ladder but require constant regrading as roles evolve.

For most organisations of 200–5,000 employees, a structure of 8–12 grades provides the right balance. Each grade should have a minimum, midpoint, and maximum salary point. The midpoint is the "market reference point" - the salary at which a fully competent, experienced incumbent should sit. The range spread (min to max) is typically 50–80% for professional and managerial grades, meaning the maximum is 50–80% higher than the minimum.

Step 3: Market Benchmarking

Internal equity tells you the relative value of roles. Market data tells you how much you need to pay to attract and retain talent for each grade. Market benchmarking involves matching your roles to survey data - from sources including Mercer's Total Remuneration Survey (TRS), Willis Towers Watson's Compensation Surveys, and Korn Ferry's global pay database - and positioning your salary ranges relative to the market. The most common policy positions are: P50 (market median) for general roles; P60–P75 for critical or scarce talent; P90+ for specialist roles where talent supply is extremely limited.

Market data should be refreshed annually at minimum, and more frequently in high-inflation or rapidly evolving labour markets. In the UAE and KSA, where salary markets can shift significantly within 12 months due to Emiratization and Saudization policy changes, quarterly benchmarking for critical roles is advisable.

Step 4: Pay Transparency and Communication

Mercer (2025) reports that organisational preparedness for pay transparency compliance rose to nearly 50% in 2025, up from 32% in 2024. The direction of travel - driven by EU Pay Transparency Directive implementation, UK gender pay gap reporting, and GCC emerging transparency expectations - is clear. Building a salary structure is the prerequisite for communicating pay transparently and defending pay decisions when challenged. Organisations that delay this work are not avoiding the transparency conversation - they are deferring it to a moment of much greater legal and reputational risk.