Pay progression · The seven models
Seven ways to move people through a band.
From the simplest to the most demanding. Every example uses the reference band: minimum €56,000, midpoint €70,000, maximum €84,000. Each model is rated against the three tests: explainability, consistency and neutrality.
Art. 6 · EUR-Lex Art. 7 · EUR-Lex
Model 01
01 Informed discretion
Managers decide increases freely, but they see each person's compa-ratio (salary ÷ midpoint) and peer data before they decide. The model makes decisions visible without making them rule-based.
Worked example · Salary €63,000 in the reference band
- Compa-ratio: €63,000 ÷ €70,000 = 0.90.
- The manager sees that peers in the same grade average 0.98.
- The manager proposes +4.0% → €65,520 and writes down why.
Three-test rating
Pros
- Fast to introduce.
- Builds data literacy among managers.
- A good first step after bands are introduced.
Cons
- Not defensible as a permanent state.
- Results vary by manager.
Typical contextTransitional stage only, with an end date.
Model 02
02 Time-based
Salaries move towards a target position in the band over a set number of years. The preferred form steers by range penetration (how far through the band a salary sits); the weaker form gives a fixed percentage per year.
Worked example · Target: 50% range penetration after five years
- Start at the minimum, €56,000 (0% range penetration).
- Each year adds 10% range penetration: 10% × €28,000 = €2,800.
- After five years: €70,000, the midpoint.
Three-test rating
Pros
- Simple and predictable.
- Easy to agree with a works council.
Cons
- No differentiation by contribution.
- Fixed percentages can be cancelled out by band moves.
Typical contextHomogeneous roles, tariff-like settings.
The treadmill effect
A fixed +2.5% raise with a band that also moves +2.5% leaves range penetration unchanged: salary €60,000 → €61,500, but range penetration stays 14%. The employee earns more but has not progressed. Hence: steer by range penetration, not by percentages.
Model 03
03 Step model
The band is divided into discrete steps. Moving to the next step requires a documented qualification or a set time on the current step.
Worked example · Five steps at 0 / 25 / 50 / 75 / 100% range penetration
- Step 1 €56,000 · Step 2 €63,000 · Step 3 €70,000 · Step 4 €77,000 · Step 5 €84,000.
- Each step promotion costs a full step: €7,000.
- Art. 7 answers are trivial: show the step distribution by sex per grade.
Three-test rating
Pros
- Maximum clarity for employees.
- Strong fit with co-determination.
- Cheap to administer.
Cons
- Step jumps are expensive.
- Little room to reward exceptional contribution.
Typical contextStrong co-determination.
Model 04
04 Sliding scale
The increase rate falls as the salary's position in the band rises. People low in the band move faster; people high in the band move slower.
Worked example · Increase by compa-ratio
- Below 0.90: +5.0% · 0.90 to below 1.00: +3.5% · 1.00 to below 1.10: +2.5% · 1.10 and above: +1.5%.
- €60,000 (compa-ratio 0.86) → +5.0% → €63,000.
- €77,000 (compa-ratio 1.10) → +1.5% → €78,155.
Three-test rating
Pros
- Tidies up legacy salaries.
- Simple table, easy to communicate.
Cons
- Reads as “punishing the experienced” without the convergence story.
Typical contextTidying up legacy salaries after band rollout.
Tell the convergence story
The midpoint is the market price of full competence in the role. Below it, development is expected and accelerated. Above it, increases are a premium. Without this explanation, the model reads as punishing the experienced.
Model 05
05 Hybrid with control point
Rule-based progression up to the control point (usually the midpoint); merit-only progression above it. “Planned up to market value, earned above it.”
Worked example · Two zones in the reference band
- Zone 1, €56,000 – €70,000: steps or a range-penetration path lead to the midpoint.
- Zone 2, €70,000 – €84,000: increases only for documented, calibrated performance.
- €73,500 rated “meets expectations” → +2.5% → €75,337.50.
Three-test rating
Pros
- Balances predictability and differentiation.
- Works with and without mature performance management.
Cons
- Needs governance for two rule sets.
Typical contextMost common target state.
Six-point governance checklist
Before introducing the model:
- Define the control point.
- Write the rules for zone 1.
- Write the rules for zone 2.
- Run an annual neutrality check.
- Set transition rules for existing cases.
- Communicate the regime change.
Model 06
06 Merit matrix
The increase depends on two inputs: position in the band (compa-ratio) and a performance rating. A matrix gives the percentage for each combination.
Worked example · Matrix rows by compa-ratio, columns by rating
- Below 0.90: 0 / 3.5 / 5.0 / 6.5%.
- 0.90 to below 1.10: 0 / 2.5 / 3.5 / 5.0%.
- 1.10 and above: 0 / 1.0 / 2.0 / 3.0%.
- €73,500 (compa-ratio 1.05) rated “meets” → +2.5% → €75,337.50.
Three-test rating
Pros
- High differentiation.
- Controls cost by position in band.
Cons
- Depends entirely on rating quality.
Typical contextMature performance management.
The matrix is trivial; the rating behind it is the real work
Five preconditions:
- Behaviourally anchored rating levels.
- Calibration across managers.
- Distribution monitoring by sex, part-time and return from leave.
- Documentation of every rating.
- Separation of the development talk and the pay decision.
Model 07
07 Person-job fit
Skills and relevant experience are each rated 1–4 against the role profile. Their sum, the fit score (2–8), sets a target zone in the band. Experience is always role-relative, never years.
Worked example · Skills 3 + relevant experience 2 = fit score 5
- Basic fit (2–3): €56,000 – €63,000.
- Good fit (4–6): €63,000 – €77,000 → target zone for this person.
- Excellent fit (7–8): €77,000 – €84,000.
- Recommended: a minimum of 2 per dimension for “good fit”. Approval level rises with distance from the midpoint.
Three-test rating
Pros
- Directly tied to the role profile.
- Works for placement at hire and for development.
Cons
- Requires a competency framework.
- Higher effort to maintain.
Typical contextExisting competency framework.
Try it · band calculator
Midpoint €70,000
- Compa-ratio
- 0.86
- Range penetration
- 14%
- Zone
- Lower third
Increase +5.0% → new salary €63,000