the pay grade
– A compensation level structure that defines discrete ranges of pay per level, and are generally defined by hierarchical levels of authority within a company. Jobs are typically evaluated by a point system that places them at a grade relative to others within the company. Pay rates for a grade are typically determined by using equivalent groups of jobs in the marketplace as benchmarks. Graded structures are narrower than bands, and are typically discrete (for example, pay ranges do not overlap). Grade pay ranges have a fixed minimum, midpoint (or control point), and maximum reference points. Compa-ratios and range utilization are measures used to analyze an employee’s pay relative to their range. Companies can set additional reference points for a grade, such as 25th and 75th percentile, and base variable compensation on one of those points.
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