When starting a small business, it's very important to have an equitable pay grade scale for employees, as is explained in this 'Intuit' infographic.
Employees are known to compare their salary with other co-workers, and if working for a small firm with a handful of employees, any pay differences can be blatantly obvious, and lead to problems. The first thing to do when determining a pay scale is choosing what the measures will be. Is pay going to be based on skills, competencies, variables or broadband? Once that is determined, a draft should be laid out that establishes ranges, and targets that have to be met by employees in order to qualify within a pay range.
It is also important to ensure that employees have career advancement opportunities, and pay raises for high performing employees.