What does the Principle of Overlap state regarding compensation pay ranges?

The Principle of Overlap asserts that it is essential to allow for overlap in pay ranges for successive grades within an organization. This concept recognizes that employees performing at higher levels may still possess skills or perform tasks that align with responsibilities at lower grades. Overlapping pay ranges provide flexibility in compensation, allowing an organization to accommodate employees who may be performing at a higher level but still technically fall under a lower job classification due to various factors such as tenure, experience, or skill sets.

By implementing overlapping pay ranges, organizations can enhance talent retention and job satisfaction. It allows for a more dynamic approach to compensation management, where promotions or salary increases do not create abrupt pay disparities. This principle acknowledges the complexities of employee performance and responsibility, ensuring that the compensation structure supports organizational growth and employee development.