This chapter has detailed the decisions and techniques that go into setting pay levels and mix and designing pay structures. Most organizations survey other employers' pay practices to determine the rates competitors pay. An employer using the survey results considers how it wishes to position its total compensation in the market: to lead, to match, or to follow competition. This policy decision may be different for different business units and even for different job groups within a single organization. The policy on competitive position is translated into practice by setting pay$-$policy lines; these serve as reference points around which pay grades and ranges or bands are designed.The use of grades and ranges or bands recognizes both external and internal pressures on pay decisions. No single "going rate" for a job exists in the market; instead, an array of rates exists. This array results from conditions of demand and supply, variations in the quality of employees, and differences in employer policies and practices. It also reflects the fact that employers differ in the values they attach to the jobs and people. And, very importantly, it reflects differences in the mix of pay forms among companies.Internally, the use of ranges is consistent with variations in the discretion in jobs. Some employees will perform better than others; some employees are more experienced than others. Pay ranges permit employers to recognize these differences with pay.Managers are increasingly interested in broad banding, which offers even greater flexibility than grades and ranges to deal with the continuously changing work assignments required in many successful organizations. Broad banding offers freedom to adapt to changes without requiring approvals. However, it risks self$-$serving and potentially inequitable decisions on the part of the manager. Recently, the trend has been toward approaches with greater flexibility to adapt to changing conditions. Such flexibility also makes mergers and acquisitions easier and global alignment possible.Let us step back for a moment to review what has been discussed and preview what is coming. We have examined two strategic components of the total pay model. A concern for internal alignment means that analysis and perhaps descriptions and evaluation are important for achieving a competitive advantage and fair treatment. A concern for external competitiveness requires competitive positioning, survey design and analysis, setting the pay$-$policy line $($how much and what forms$),$ and designing grades and ranges or broad bands. The next part of the book is concerned with employee contributions$-$paying the people who perform the work. This is perhaps the most important part of the book. All that has gone before is a prelude, setting up the pay levels, mix. and structures by which people are to be paid. It is now time to pay the people.

$1.$ Contrast pay ranges and grades with bands. Why would you use either? Does their use assist or hinder the achievement of internal alignment? External competitiveness?

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