A founder of a 120-person services firm is preparing a proposal. The client asks for a rate card by level. Internally the firm has Software Engineer, Senior Engineer, Lead, Senior Lead, Principal and Associate Principal, and nobody can say clearly what separates the last three. Two Leads have different pay and the same title.
Titles and grades grow by accident until a founder has to explain them to a client, a candidate or an employee. This post shows how to build a structure that stays useful as the firm grows.
Three things that are often mixed up
- Grade: an internal level that sets the pay band, the scope of work and the expectations.
- Title: the name on the business card and email signature, which can be more flexible.
- Billing level: the category used to price a person's time to a client.
Keep them linked but separate. Grade drives pay. Title helps with clients and recruiting. Billing level drives the rate card. When a firm uses a single word for all three, every promotion becomes a pricing discussion.
Start with the work, not the names
Look at what people at each stage actually do on projects. A junior developer works on tasks that someone else has defined. A mid-level developer owns a module. A senior person shapes the design and guides others. A lead owns delivery for a team. A principal affects several accounts or the firm's technical direction. Describe these in plain words and test them against real people.
Build the structure in order
- 1
List the role families
Typically engineering, quality, delivery management, solution or architecture, support, and the functions such as HR, finance and sales. Keep the families few.
- 2
Define five to eight grades
Write for each grade the scope, independence, influence and skills expected. Use examples from your own projects. Avoid vague words like 'exposure' without saying what it means.
- 3
Map current people
Place each person against the descriptions. Do it in a small group, with evidence. Expect disagreement, and record why you settled where you did.
- 4
Set a pay band for each grade
The band depends on your market, margins and what you can carry. Make it a range, so there is room within a grade. Take care that neighbouring bands overlap sensibly.
- 5
Choose titles
Pick titles that clients and candidates recognise. A grade may carry one or two titles, but a title should not span many grades.
- 6
Create billing levels
Group grades into a smaller number of billing categories. Finance and the founder decide the rates with reference to costs, the market and client contracts.
- 7
Write the promotion rule
State what evidence is needed to move a grade, who decides, and when decisions are taken.
Billing levels need a different logic
Clients buy outcomes and experience, not your internal ladder. Three or four billing levels are usually enough. Two people in the same grade may be billed differently if one has rare skills the client wants. Decide how you will handle that case and who approves exceptions. Write the principle, so that account managers do not invent one under pressure.
Do not leave the billing level to the project manager's mood. A client who sees a Lead billed at one level on one project and another on the next will ask questions.
Grade name and the titles it may carry.
Typical scope of work, with a project example.
How much supervision is expected.
Skills and tools expected, with depth.
Influence on others: reviews, mentoring, hiring.
What the person is not yet expected to do.
Billing level this grade usually maps to.
Evidence needed to move to the next grade.Avoid the common traps
- Too many grades. Each additional level needs an honest description, and most firms under 300 people can do with six to eight.
- Title inflation to retain people. It satisfies someone for a few months and cuts the value of titles for everyone.
- Management as the only path upward. Give strong technical people a route to higher grades without managing teams.
- Bands that are copied from a friend's firm. Your costs and market differ.
- Grades never reviewed. Look at them each year, and when you open a new line of business.
Rolling it out
Brief the leaders first and let them test the descriptions on their own teams. Then hold small group sessions for staff, with time for questions. Give each person a one-page note showing their grade, title, and what the next grade needs. Announce the promotion cycle dates, so people know when they will be considered.
Review after six months. Ask which descriptions caused confusion and which cases did not fit. Adjust, and note the date of each change.
Where this fits in the larger picture
A grade structure is part of how the firm is organised. The organisation design page describes how GullyHR approaches roles, reporting lines and levels. Enterprise software firms often have richer ladders for functional and technical consultants, and the enterprise software companies page describes how those paths usually look.
The grades will feed straight into the appraisal cycle design, so settle them before the next cycle opens.
