Pay scale

A pay scale (also known as a salary structure) is a system that determines how much an employee is to be paid as a wage or salary, based on one or more factors such as the employee's level, rank or status within the employer's organization, the length of time that the employee has been employed, and the difficulty of the specific work performed. Examples of pay scales include U.S. uniformed services pay grades, the salary grades by which United States military personnel are paid, and the General Schedule, the salary grades by which United States white-collar civil service personnel are paid. Private employers use salary structures with grades (including minimums, midpoints and maximums) to define the ranges of pay available to employees in each grade/range.

In 2002, Gregory A. Stoskopf identified a trend of employers to align their salary structures to the competitive values of jobs in the appropriate labor market. Salary range minimums were being aligned to approximately the 25th percentile of the market data, midpoints were being aligned to market medians, and maximums were being aligned to the 75th percentile of the market data. In an article published by WorldatWork, Stoskopf first coined the term "market-based salary structure" to describe this phenomenon. In 2012, WorldatWork and Deloitte Consulting LLP co-sponsored research to determine the extent to which this practice had become prevalent in US employers' salary administration practices. By that time 64% of employers utilized market-based salary structures to administer pay for their employees.

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