Designing a Salary Structure

What salary bands, midpoints and range spreads are, and why HR teams who can design a salary structure can discuss pay without losing credibility.

HR at most Thai companies sets salaries by guesswork mixed with individual negotiation. After 2 to 3 years the problems show: talented people and good negotiators are paid differently for the same work, and long-serving staff earn less than newer hires who joined later. This isn't a system; it's a collection of scattered decisions. A Salary Structure is the framework that reduces this disorder, so comp decisions are made on data, not on negotiation.

Components of a Salary Structure

A salary structure in common use has 4 main parts.

Four Pieces to Understand

1. Job level: the level of work used for comparison across the company, such as L3, L4, L5
2. Job family: groups of jobs that share a comp scale, such as engineer, designer, sales
3. Salary band: the salary range for each level in each family
4. Midpoint: the centre of the band, the target for someone performing the full scope

Good design doesn't start with numbers but with leveling: grouping jobs according to their actual scope and responsibility, not tenure. Unclear leveling causes the bands designed afterwards to break down as well.

Setting Bands Using Market Data

Each level's band must be based on market data, not set from your desk.

Steps to Set Bands

• Buy or access market survey data from at least 2 sources
• Decide whether to position at P50, P60 or P75 of the market, according to your strategy
• Calculate the midpoint of each level based on the chosen percentile
• Set a range spread of around 30 to 50 percent between min and max
• Check overlap between adjacent levels, which should be 15 to 30 percent

A popular strategy in the Thai market in 2026 is positioning at P60 to P65 of the market in talent-short fields such as AI, data and security, and at P50 in general fields. Bands set unnecessarily high raise total cost without improving retention.

Positioning People Within the Band

Having bands isn't enough. You must answer where in the band new hires start, and how existing staff move up.

Criteria for Setting Position

• P25 to P40 for people new to the level who still need to ramp up
• P45 to P60 for people already performing the full scope of the level
• P65 to P75 for people performing beyond scope, close to the next level
• P80+ used sparingly, only for people working at the level above but not yet promoted

With a framework like this, HR can explain why each person earns what they do, rather than just saying "that's how the negotiation went". Conversations about pay with team members become direct and respectful. Read Pay Transparency: Is Disclosing Salaries a Good Idea? to see how this system supports disclosure.

A good salary structure doesn't make everyone earn the same; it makes everyone believe the system that decides is fair.

Promotions and Adjustments Within the Band

When people get better at their work, there are two ways comp can rise.

Paths for Comp to Rise

1. Move within band: adjust position in the current band, used in the annual merit review
2. Promote to next level: move up to the next level, usually with a comp increase of around 10 to 15 percent

Promotions without a supporting band structure often leave the newly promoted person at P10 to P20 of the new level, because the new band is wider. People feel they were promoted but their pay barely rose. The right approach is to design it so people land at P40 to P50 of the new level after promotion, not bounce back to the starting point.

Measuring the Health of the Comp System

A good structure is measurable.

Metrics to Use

• Average compa-ratio for each level should be 0.95 to 1.05; close to 1.0 means the band fits
• Distribution of compa-ratio among people at the same level: no large outliers without a reason
• Attrition rate of underpaid people vs those within range
• Candidates accepting offers in the first round

These numbers become a language you can use with the CFO and CEO, rather than HR's feelings.

Getting Started If You Have No System Yet

Small to mid-sized companies without bands don't need to build a big system from the start. Begin with simple leveling by team, set up the main job families first, and find market data, even free data. See How to Benchmark Salaries, then expand to other families. It doesn't need to be perfect from day one: a system that works beats a perfect system that can't be used in practice.

For HR teams who want to learn comp design, browse courses in Plants.work Learn or talk to an advisor with hands-on experience on the Mentors page, and build on it with Designing Variable Pay so your total package is competitive.

In short, a salary structure isn't a technical task HR finishes alone. It's a strategic tool that lets the company talk about money with employees directly and confidently. Organisations with a good structure retain people better and pay more efficiently.