A pay band is a range of compensation set for specific job roles or classifications, typically defined by variables such as experience, seniority, job complexity, or geographic location.

Pay bands (sometimes also used as a broader term that encompasses several pay levels, ranges or grades) is a part of an organized salary compensation plan, program or system. In an organization that has defined jobs, pay bands are used to distinguish the level of compensation given to certain ranges of jobs to have fewer levels of pay, alternative career tracks other than management, and barriers to hierarchy to motivate unconventional career moves. For example, entry-level positions at a landscaping company might include truck drivers and laborers. Those jobs and those of similar levels of responsibility might all be included in a named or numbered pay band that prescribed a range of pay, (e.g. Band 1 = $10–17 per hour). The next level/classification of a group of similar jobs would include increased responsibility, and thus a higher pay band (e.g. Band 2 = $13–21 per hour).

Organizing pay structures in a pay band manner allows for overall control at the management level of an organization, while still giving some discretion for supervisors to reward good performance, and keeping within a reasonable compensation budget structure.

The history of pay bands dates back to the beginning of employment and compensation. The amount of compensation for one's work is a question that many have tried to answer but have come short. In the United States the Classification Act of 1923 mandated that pay was based on performance not qualifications, a practice that made sense when the workforce was largely clerical. However, by the 1950s managers were complaining that the system was problematic for reasons of no competition, frustration and non-responsiveness. In April 2000, the United States General Accounting Office authorized Section 9509, which authorized the general workforce classification and pay. In detail, the term "broad-banded pay system" was clearly defined as any system for grouping positions for pay, job evaluation, and other purposes that is different from the system established under chapters 51 and 53 of title 5 as a result of combining grades and related ranges of pay into one or more occupational series.

Organizations use a pay system for rewarding employees with compensation and allow easy and equitable management of remuneration. There are a number of pay structures that have been developed by different organizations.

In this hierarchical model, salary increases are tied to promotions. Employees must advance to higher-level positions; often managerial, to receive higher compensation. While it ensures a clear progression, critics argue it discourages collaboration and innovation.

Although the Pay-for-Performance System is "widely used" for its "positive effects" on employee production, findings of negative side effects like "dysfunctional competition" have left employers wondering if this plan should be adopted. Their reasoning in keeping this system in place is related to the need for "fair managerial control", a battle many managers are striving to win.

Broadbanding uses the General Schedule (US civil service pay scale) that places families of occupations together. For example, Office Services, General Support, Analysis, Law Enforcement, Sciences, Health, etc. Movement to a different level is based on full-performance, expertise, or years of working in this position. This structure is used to classify work requirements rather than positions to get a higher pay.