How to create salary bands for a small or growing business (with a real example)

To create salary bands, define levels based on what each role is expected to deliver, write down the criteria for each level, then benchmark each level against the market and set a pay range for it. Share the bands with your team and review them once a year so they stay fair and competitive.

A salary band is the pay range attached to one level in your company. A salary grid is the full set of bands side by side. If you've read our guide to pay transparency in Canada, this article is the practical next step: how to build the bands themselves.

Canadian employees want to understand how their pay is decided, yet most of the employees we surveyed say they've heard little or nothing about it.

Alan's 2026 pay transparency study surveyed 449 employees and 298 HR professionals across Canada, at a 95% confidence level. It found that:

Employers can close that gap. A clear pay framework helps you explain offers the same way to every candidate. It also gives employees a clear picture of why they earn what they earn and what it takes to earn more.

Titles drift over time. "Senior" means different things on different teams, and titles are often handed out to close a hire. Levels describe what a person is expected to deliver: the scope of their work, how independently they work, and the impact of their decisions.

Start by listing every role you have today. Then group the roles by expectations instead of by name. A senior engineer and a senior marketer can share a level if their scope and impact are comparable.

For each level, describe in plain words what good work looks like. Useful criteria include:

Put these criteria somewhere everyone can find them. Written criteria turn a salary band from a number into an explanation.

Benchmarking means comparing your pay with what similar employers pay for similar work. Common sources include:

Next, decide where you want to sit compared with the market. You might target the median (the middle of the market), or pay above it for roles that are hard to fill. If your team works across Canada, also decide whether you'll use one national band or adjust by region. Write these choices down. Together they make up your pay philosophy.

Each band needs a minimum, a midpoint and a maximum. Many employers use the midpoint as their target market position for someone who fully meets the expectations of that level.

Then map each current employee to a level. If someone's salary falls below or above their band, find out why. Then write down a plan you'll apply the same way to everyone, in line with your pay policy and the employment rules that apply to you. Some companies take a simpler approach and let the level set the salary, with no range at all.

Transparency is a spectrum. You can:

Also decide what stays confidential, and for how long, for example during promotion reviews. Before you publish anything, brief your managers. They'll be the first to hear "Why am I here in the band?"

Markets move. Once a year, refresh your benchmarks, adjust your ranges and check for gaps between people at the same level. Tell the team what's changing, and why, before it happens.

Alan has published its salary grids publicly for about ten years. The system works like this:

You can see Alan's live salary grids, including Canada's. The lesson for a growing company is simple: set clear rules first, then publish. Numbers without written criteria raise questions you won't be able to answer.

This is the biggest fear in Canada. In Alan's study, 41% of Canadian HR leaders named internal conflict as their top fear, more than in any other country surveyed. Only 18% of employees thought transparency would mostly cause conflict. Written criteria give managers a clearer basis for pay conversations, so they can explain decisions instead of defending them.

That's a useful conversation to have. Use the level criteria to show what growth looks like and what moving up the range or to the next level takes.

You don't have to. Start with anyone below the minimum and with unexplained gaps between people at the same level. Share a realistic timeline for the rest.

Several provinces require employers to include pay information in publicly advertised job postings. The rules differ on who they cover, what counts as acceptable pay information and what else the posting has to include.

Sources: Government of British Columbia, Government of Ontario, Government of Prince Edward Island.

Other provinces may bring in similar rules, and existing rules can change. Check the current rules in every province where you hire, including for remote roles, and whether each job is federally or provincially regulated. Get legal advice if you're unsure. If your salary bands already exist, it's easier to give consistent pay information in your job postings.

Salary is only one part of total pay. The part many employees understand least is benefits. They can be hard to understand, especially when coverage limits, reimbursement rules and employer costs aren't clearly explained. Apply the same transparency here: explain what the plan covers and what it costs. If your plan is up for renewal soon, our group benefits renewal checklist can help you review it.

At Alan, our prices are on our website with no hidden fees, and employees can see their coverage in the app anytime. Book a meeting.