What is a salary band and why do you need one?
A salary band (pay range) defines, for each job grade in the company, the lowest and highest salary that can be paid, plus a midpoint targeted against the market. Without bands, pay is usually set by negotiating power at the time of hiring; over time, unexplained gaps appear between people doing the same job, and pay review decisions become personal.
A well-designed pay structure does three things:
- Internal equity: positions with similar responsibility are paid in a similar range.
- External competitiveness: midpoints are tied to market data, so the risk of losing talent can be monitored.
- Budget control: pay increases and job offers stay within a defined range and costs become predictable.
Pay transparency rules are also making bands close to a requirement. If your company operates in the European Union or is part of an EU group, see our guide to the EU pay transparency directive.
What steps are involved in building salary bands?
- Update job descriptions: document the responsibilities, knowledge and experience required for each position.
- Carry out job evaluation: score positions on factors such as knowledge, problem solving, accountability and impact, and group them into grades.
- Collect market data: take the median for each grade from salary surveys that match your sector, region and company size.
- Set midpoints: define the midpoint of each grade according to your pay policy (market median, upper quartile and so on).
- Choose the range spread: calculate the minimum and maximum from the midpoint.
- Place current employees: calculate each employee's position in the band and their compa-ratio.
- Plan for outliers: set correction or freeze rules for employees below or above their band.
How many grades do you need and where does market data come from?
The number of grades depends on company size and structure. Four or five grades are usually enough for a company of up to 50 people; a company of several hundred with separate specialist and management career paths may have eight to ten. Too many grades turn every promotion into a small pay step and are hard to manage. Too few squeeze positions with different levels of responsibility into the same range.
Market data comes from independent salary surveys, industry associations and consultancy reports. When choosing data, check three things: that the comparator companies are similar to yours in sector and size, that the data is recent, and that it is clear whether figures are gross or net. In Turkey, salaries are normally discussed and surveyed on a gross monthly basis, but candidates often negotiate in net terms, so be explicit. In periods of high inflation, data even a few months old can be out of date; note which month the data reflects and age it forward with expected increases where necessary.
Taking quartiles (lower quartile, median, upper quartile) rather than a single market point helps you choose your pay policy more deliberately. A common approach is to anchor midpoints for critical, hard-to-fill roles to the upper quartile and for easier-to-fill roles to the median.
How do you calculate the minimum, midpoint and maximum?
The range spread shows how much higher the maximum is than the minimum: range spread = (maximum - minimum) / minimum. The midpoint is the average of the minimum and maximum. From these two definitions:
- Minimum = midpoint × 2 / (2 + range spread)
- Maximum = minimum × (1 + range spread)
In practice the spread widens as grades rise. Ranges of 20% to 30% for entry and specialist grades and 35% to 40% for management grades are common, because differences in performance and impact under the same title are larger at senior levels. The midpoint progression between grades (for example 15% to 20%) determines how much bands overlap.
Example: how do you build a five-grade structure in Python?
In the example below, the first grade midpoint is TRY 40,000, each midpoint is 20% higher than the one below, and the spread rises step by step from 20% to 40%. The calculation uses decimal precision with half-up rounding to the kuruş (cent).
from decimal import Decimal as D, ROUND_HALF_UP
MINIMUM_WAGE = D("33030") # 2026 gross monthly minimum wage, TRY
q = lambda x: x.quantize(D("0.01"), ROUND_HALF_UP)
mid = D("40000")
spreads = [D("0.20"), D("0.25"), D("0.30"), D("0.35"), D("0.40")]
for grade, spread in enumerate(spreads, start=1):
low = q(mid * 2 / (2 + spread))
high = q(mid * 2 * (1 + spread) / (2 + spread))
assert low >= MINIMUM_WAGE, f"G{grade} minimum is below the minimum wage"
print(grade, low, mid, high)
mid = q(mid * D("1.20"))| Grade | Range spread | Minimum | Midpoint | Maximum |
|---|---|---|---|---|
| G1 (entry) | 20% | TRY 36,363.64 | TRY 40,000.00 | TRY 43,636.36 |
| G2 (associate) | 25% | TRY 42,666.67 | TRY 48,000.00 | TRY 53,333.33 |
| G3 (specialist) | 30% | TRY 50,086.96 | TRY 57,600.00 | TRY 65,113.04 |
| G4 (senior specialist) | 35% | TRY 58,825.53 | TRY 69,120.00 | TRY 79,414.47 |
| G5 (manager) | 40% | TRY 69,120.00 | TRY 82,944.00 | TRY 96,768.00 |
In this structure adjacent grades overlap: the G1 maximum (TRY 43,636.36) is above the G2 minimum (TRY 42,666.67). Overlap is normal and allows an experienced G1 employee to earn more than a newly promoted G2 employee, but if it becomes too large the grades lose meaning.
Can a band minimum be below the minimum wage?
No. No band minimum may be below the gross minimum wage in force. In 2026 the gross monthly minimum wage in Turkey is TRY 33,030. The assertion line in the code above checks this rule automatically.
An example: if you set the entry grade midpoint at TRY 35,000 with a 20% spread, the minimum comes out at TRY 31,818.18. That is below the minimum wage, so the band is invalid. With a 20% spread, the midpoint must be at least TRY 36,333.00 for the minimum to stay at or above TRY 33,030. Whenever the minimum wage changes, recheck entry grade minimums; see our guide on the 2027 minimum wage and its HR impact.
Bands are built on gross pay. To see what a band value means in net pay for the employee and total cost for the employer, use the salary calculator and the employer cost calculator. For example, a gross salary of TRY 50,000 gives a January net of TRY 40,207.53 and an employer cost of TRY 60,875.00 (19.75% employer SGK share after the 2-point Treasury discount outside manufacturing, plus 2% unemployment insurance). In manufacturing, the 5-point discount brings the share to 16.75% and the cost to TRY 59,375.00; without the discount the share is 21.75% and the cost TRY 61,875.00. Current rates are on the payroll parameters page.
What is compa-ratio and how do you read it?
Compa-ratio is the employee's salary divided by the midpoint of their grade: compa-ratio = salary / midpoint. A value of 1.00 means the employee is exactly at the midpoint. Range penetration is also used: (salary - minimum) / (maximum - minimum), which shows how far into the band the employee sits.
| Employee (G2) | Gross salary | Compa-ratio | Range penetration | Interpretation |
|---|---|---|---|---|
| A | TRY 41,000 | 0.854 | Below range | Needs to be brought up to the minimum (TRY 1,666.67 gap) |
| B | TRY 44,000 | 0.917 | 12.5% | Appropriate for a new or developing employee |
| C | TRY 50,000 | 1.042 | 68.8% | Fully competent zone |
| D | TRY 52,000 | 1.083 | 87.5% | Close to the maximum; consider promotion or variable pay |
| E | TRY 55,000 | 1.146 | Above range | Red-circled; base pay increases are limited |
A common reading: 0.80 to 0.90 is the learning zone, 0.90 to 1.10 the competent zone and above 1.10 the senior or high-performance zone. Tracking average compa-ratio by department or grade helps you spot groups that are falling behind the market early.
What should you do with employees outside the band?
Below the band (green-circled): pay is brought up to the minimum within a reasonable period, often over one or two review cycles. Budgeting this correction separately from merit increases ensures the underpaid employee receives both the correction and a performance increase.
Above the band (red-circled): pay is not reduced; under Turkish labour law, changing contractual pay to the employee's detriment requires written consent. Instead, base pay increases are limited or frozen and performance is rewarded with a one-off bonus. As bands are updated upwards each year, the employee gradually moves back inside the band.
How often should salary bands be updated?
In periods of high inflation, as in Turkey in recent years, bands should be updated at least once a year, ideally alongside the main pay review. Updating is not just multiplying midpoints by the inflation rate; refresh market data, check the effect of minimum wage changes on entry grades and confirm that the grade structure still fits the organisation. To build a merit matrix that uses compa-ratio when distributing the increase budget, see our salary increase policy guide, and for performance input, the year-end performance review guide.