Pay and rank have a connection but not a direct connection.
What is the value of your work? Is your impact worth millions to the company? Is it worth just your salary? Are you in an overhead function that enables the rest of the business? Do you work on just new business ideas that have no value now but maybe a lot later? Can you do things that others can not or will not?
The answers to these questions and your ability to negotiate will dictate your pay. The fact is that being savvy and being able to navigate politics/being well liked, intentionally or otherwise, is hugely important. Most companies don’t make it particularly clear how to progress or how a manager should compensate the team aside from a rough rubric on how to get there. Most years an HR BP says to me “you have a X% budget, we recommend an (X - 2)% COLA and the rest is for your merit raises.” At some places they just ask for a stack rank and come up with the number. In either system, demonstrated effectiveness and willingness to work well with people (aka being savvy, political, likable, full of BS, etc - pick your favorite) affects your ability to get more than that Cost of Living Adjustment. When it’s promotion time, a good manager will make sure your skills fit the role. A bad one just picks someone based on their biases - positive in your favor in the short term, bad for your career if you never catch up to what is needed to do the job.
Now this is the time to draw the line at pay vs rank. Most of leveling and rank is about org design and you can be a Director making 70K or a Director making 300K in the same type of software role in the same vertical.
Leveling is an HR and management thing. Value is what you provide and should be compensated for. Bands are there to keep things from being completely insane. Levels are a guide for what should be.
If you were able to change your title at work to “Professional Enthusiast” and your level to L-1, but did all the same work and were just as effective, would you want your pay to be any different? Again, let’s differentiate value and compensation from the rest of the structural stuff.
These management constructs are checks and balances on both good and bad managers alike. Even if you do a great job as a manager and someone is ready to be promoted, your HR BP can have the bad news that there is no money for that promotion and to assign no new responsibilities (“no free consulting” as I have had to tell my reports in this situation). Conversely the money could be there but the space for the role is not. Do you really want to work somewhere that has 1000 people and 100 VPs? Who exactly is in charge? Is it VP Tom who is a peer of VP Jimmy who reports to VP Marry who reports to SVP Sarah? Heck no, just break the bands. Every time I’ve had a long tenured Staff/Principle engineer they’re sitting at 25% over what the band says they should make and no one in HR or the SLT ever complains. They see that and they know exactly who that person is.
In turn, all of this exists to solve the problem of org design and hierarchy. Leveling is a tool against title inflation. Need to restrict movement into senior management? Get pickier in your leveling. Need to retain people? Give them a bonus structure or widen bands. Titles are nice and all but they don’t buy private school tuitions, sports cars, and fancy vacations. My L4 employees that could afford a new condo and a vacation to Bali were never all that upset they were never going to see L3 and L2 due to org design constraints.
I myself am a slightly funny example. I moved from a multinational based in Europe to a small software company in California. My title went from Director (L3 there, Senior directors and in between to VP got point numbers) to Senior Manager (L4.X on the old scale but an effective L3) and my span of control from 30-60 to 6. My job is basically the same except for the number of people in my span of control (in the former job the same number of Managers and Staff engineers reported to me directly). We don’t have a CTO and there are two VPs where one has a “Head of” title. There are a couple Directors as well (call them effective L2 here). Effectively my title has changed but my level has not. The pay also went up a little bit with the move.
There is really no where for me to go in this hierarchy since we’re pretty small. If/when they add a CTO, down the ladder I go, a CTO level is added, and more restrictions are placed to stratify the leveling to match the stratification of the jobs. What will a CTO do over the current Head of Tech? Not sure as my skip level does everything all the other CTOs I’ve worked for has done. I’m sure they’ll come up with something for my current Skip Level to stop doing though.
In some companies I’ve worked and famously at Google, you have ICs that are at the VP level, by either title or level, that aside from having to go to a few mandatory Senior Management type meetings are exceptionally well paid Staff/Principle engineers. There’s nothing wrong with this so long as the title is not abused and the value is there. It tends to look crazy though. Why do these situations exist? Someone needed to pay them X to get into the business and X happened to be in the band for VP. Or, they were part of an acquisition and actually stuck around. They needed some significant title and to report to the CEO and it happens that VP is the currency available for that even though they’re not doing that work. At my last job we didn’t do this and at one point a CTO of an acquisition actually reported to me, a Director.
It’s the holes in the way things work that best betray that value and title are not directly connected but management come as close as possible just to make it possible to figure out what the heck is going on at a glance. In turn, ask for that 10k if you think you’re worth it. It may be easier to get it than to get the level bump.