When ad-hoc breaks

Most startups extend offers based on the candidate's last salary plus a bump. By 30–50 employees this creates compression, inequity, and pay-discrimination exposure. Bands fix it.

The five-step process

  1. Define levels. Engineering: IC1–IC6, M1–M3. Product: PM1–PM4. Etc. Be specific about what each level owns.
  2. Benchmark. Buy a Radford or Mercer subscription, or use OptionImpact (free for startups). Pull 25/50/75th percentile for your market.
  3. Set bands. Each level gets a min/mid/max. Mid = market 50th. Width: 30–40% wide for ICs, narrower for execs.
  4. Geo factors. SF/NYC = 100%. Tier-2 cities = 90%. Tier-3 = 80%. Remote-anywhere typically = 90%.
  5. Document and post. Internal wiki page. Update annually.

Common pitfalls

  • Bands too narrow. Doesn't allow performance differentiation; high performers leave.
  • Bands too wide. No internal equity; manager negotiation skill becomes the determining factor.
  • No regular re-leveling. When market moves 8% and your bands move 3%, churn rises.
  • Equity outside the band. If equity isn't part of the band conversation, recipients will feel cheated when they discover the spread.

What to disclose

Inside the company: full bands by level. Outside: range for the specific role. Yes, your competitors will see them. That's fine — they're already looking.