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Tom Farmer demonstrates how to create a simple salary range structure in this tutorial. He emphasizes the importance of having accurate employee data and provides a spreadsheet template with columns for name, title, grade, and function. The tutorial covers different approaches to pay structures, including function-specific ranges or a uniform range for employees in the same grade. Additionally, Farmer discusses the Patterson grade job evaluation method, which considers factors such as judgment, accountability, knowledge, skill, impact, and complexity to determine job bands and subgrades.