What is a Grade in HR? Meaning and Example

Grade vs band vs designation

These three terms are easily confused. The designation is the job title an employee uses, such as Senior Accounts Executive. The grade is the internal level behind the title, such as E3, which decides the pay range and entitlements. A salary band is the pay range attached to a grade, or in some companies a wider level grouping several grades, such as Band B covering E3 and E4. A Senior Accounts Executive and a Senior HR Executive can share one grade while holding different designations.

• Designation: what the job is called
• Grade: what level the job sits at
• Salary band: what that level pays, from minimum to maximum

What grades control

Grades make policy simpler. Instead of writing rules for 80 designations, the company writes them for 8 grades: grade M1 and above travel by air, grades E1 to E3 have a 30-day notice period, grade S1 managers can approve expenses up to a set limit. Grades also give a clear career path, since a promotion means moving to the next grade. In ZeniaHR, grades are one of the organization masters, and notice days in the work terms policy can be overridden per grade.

Designing a grade structure

Start by evaluating roles on a few factors: knowledge needed, responsibility for people and money, complexity and impact. Group roles with similar scores into grades. Keep the number of grades small enough to mean something; a company of 300 people seldom needs more than 8 to 10. Name grades with a simple code, such as W for workers, S for staff, E for executives and M for managers, followed by a number. Publish the grade for each designation, and review it when roles change significantly.

Frequently asked questions