How to Determine a Salary Scale for Employees?

When you have your own business, your employees should be given ample salary. To best give them the salary that they deserve, you need to create a salary scale for them.

A salary scale is basically a structure wherein you determine how much an employee will be paid based on a number of factors such as the rank, the skills, traits, just to name a few.

Determine Salary Scale for Employees

Failure to follow this structure would result in unhappy workers and you might end up facing a lawsuit.

So, to prevent those things from happening, your business has to have one. Today, I am going to talk about how you can determine a salary scale for your employees.

1. Examine Personnel Positions

The first thing you need to do to determine a salary scale for your employees is to examine your company’s positions.

In each position, assess what qualities and responsibilities are needed. Also, what are the demands that every position should meet?

Lastly, ascertain the impact of the said position to your business. For example, a manager or a supervisor will have more impact than to ask a normal staff.

2. Do Some Research

In a competitive world, the salary that you should give to your employees should also be competitive and right for them.

Before you can give a reasonable payment to your employees, research is key. Find out what other companies are willing to pay for certain positions similar to the structure of your company.

For instance, how much do other companies pay for an HR staff? How about for the Finance Director?

After researching on them, find out the median and establish that as your base pay.

3. It Should Be Flexible

Now, even if you have established the base pay of certain employee positions, it should be flexible. What I mean by this is that there should be a minimum and a maximum amount you’re willing to pay the employee.

Suppose that you hire a new staff member, having an established min-max pay can help you. The reason is that some employees might ask for a bigger pay because of their experience, their accolades, the degrees they might have, etc.

In cases such as these, you can refer to the maximum amount you’re willing to pay for that position. Also consider that if this new potential employee can be a huge asset to your company, then it is just fitting that they receive a higher base pay. But, if the new staff is just a fresh graduate, you can then offer the minimum.

The salary should not only be flexible, but it also has to be reasonable as well.

Related reading: 5 Salary Secrets that Boss Will Never Tell You


4. Other Schemes

You could also try other pay schemes like skill-based pay, a payment that is based on a staff’s competency, or you can even use the variable payment system.

In the skill-based pay, you establish a certain set of skills that are required for the job and you pay them based on it. Should the worker become more skilled in the area, they are eligible for a salary increase.

When it comes to competency, an employee is gauged based on their characteristics and how they perform in your business. For example, if your employees are assigned to reach a certain quota and they manage to go over that because they’re so competent, then they deserve a good salary.

In the Variable Payment System, you pay your employees based on milestones and their overall performance. The key here is to create a baseline first and adjust the pay accordingly.

5. Consider Compensation

There will be times where your company or business can suffer financially. Despite that, you’re still obligated to pay all of your workers.

To ensure that they still get paid without too many problems, you can consider compensation. You see, if your employees will receive different perks, they might be willing to consider that option than just a flat out pay deduction (due to the company’s lack of funds).

You can throw in some bonuses, a commission, and insurances. Just to name a few. But even though there are ways you can compensate them, it is still best that you have the funds to pay them handsomely.

There are means of alternative funding that you can employ so that you will have enough money in your reserves to give to your employees.


Determining a pay scale for your employees is a must. It is important because it gives you a set structure so that you will know how much your company is willing to pay for certain positions.

Furthermore, transparency is key. Your employees should know how much they are paid and they should also know of any deductions or increase that they might incur during their time in your company.

You are obligated by law to pay your workers, so be sure to have the pay scale established so that you will not have any problems with your employees.

Lidia Staron
About Lidia Staron


Lidia Staron is a part of Content and Marketing team at She contributes articles about the role of finance in the strategic-planning and decision-making process. You can find really professional insights in her writings.

This entry was posted in Employment Agencies, Guest Posts, Tips for Employer.

  • Thank you for sharing this nice and informative article. All the information is dealt with clarity.