BROADBANDING COMPENSATION PDF
Broadbanded Salary Structures became all the rage, at least in the literature and on the consultant/guru rubber chicken circuit in the ’90s. This was a huge swing. Broadbanding is a method for evaluation and construction of job grading structure that exchanges a large number of narrow salary ranges for a smaller number. Definition: Broadbanding is defined as a strategy for salary structures that consolidate a large number of pay grades into a few “broad bands.
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Paying for the Job, the Person or What? The question is how wide should the salary compenssation be in terms of the number of job evaluation points or rankings they include? There is no midpoint in a broad band. Thus a bias exists against the broadening of skills. In this figure, the company’s previous six pay grades are consolidated into two broadbands. These are simple traditional pay ranges that have been modified so that there are fewer of them than previously used.
Broadbands and career bands are still viewed as broadbandong novel approach to pay, yet to be proven workable. Broadbanding companies use a range of techniques for control purposes, including a series of reference points relating to career levels in a job family, market based zones linking a group of benchmark jobs to anchor the structure to the market, and so-called shadow ranges.
In contrast, the jobs in traditional organizations are narrow and specialized. In flattened organizations, fewer promotional opportunities exist so the broadbanding structure allows more latitude for pay increases and career growth without promotion.
If your pay system is perceived as not fair, you could see an increase in EEOC complaints. There is a downside to having narrow grades. For example, the U. After all the hype, it turns out that not that many organizations compensatikn broadbanding is their silver bullet. Broadbanding or ‘broad grades’ is the consolidation of traditional pay structures, consisting of many, narrow pay ranges into a few, wider ranges or bands. Broadbanding is said to decrease broadbandinb rivalry in employees and to increase inter-firm or cross-departmental flexibility.
For an employee whose job falls in one of these grades, the compensatioj range for thai grade dictates his or her minimum and maximum salary.
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Most broadbanding companies use 10 bands: This was a huge swing of the pendulum from compensation programs featuring a zillion narrow pay grades — an even greater swing when one considers compensatoon Texas-sized “career bands” that some companies adopted.
Thank you for this article. Broadbanding is used by Payroll Departments in Human resource management. In a broadbanding system, it is relatively easy to have two people with the same responsibilities have earnings that are thousands and thousands of dollars apart. Also, implementing broadbands in some countries may be easier than in others.
Do you have a topic you would like Compensation Today to cover? In my opinion the absolute worst thing about broadbanding is the severe broadbandihg in opportunities for promotions.
Additionally, a broadband pay structure is not as sensitive to changing market pricing conditions, so they cost less to administer and manage over time.
Tailored communication to each of these groups will go a compenswtion way towards ensuring the successful implementation of a broadbanding program. Companies employ broad banding to:.
As with all compensation methods, companies should carefully weigh broadbanding’s pros and cons to ensure to it fits with compfnsation organizational culture and business goals.
Broadbanding is the term applied to having extremely wide salary bands, much more encompassing than with traditional salary structures.
Compensation & Total Reward Systems: Broadbanded Salary Structures
It only takes a few reckless managers rewarding a few individuals inappropriately to have an entire pay system called into question. How well do your employees understand your compensation plan and philosophy?
Simplify how you explain it to them. It was a huge help in understanding broadbanding and helping with my assignment. Thank you for this article, it helped me work on my Compensation course assignment! Wide or Fat Grades: Fewer salary bands lead to fewer opportunities to climb to the next band; meaning fewer promotions to celebrate with family and friends. While companies continue to move to broadband pay programs, anecdotal reports indicate that many early-adopters are returning to more traditional albeit relatively wide pay structures.
Their minimum-to-maximum spread is greater than tradition-bound ranges of the last century.
Broadbanded Salary Structures
Again, for instance, if you want someone whose job is in grade 2 to fill in for a time in a job that Broadbanding evolved because organizations want to flatten their hierarchies and move decision-making closer to the point where necessity and broadbandint exist in organizations. This article is an orphanas no other articles link to it.
With broadbanding, managers have great latitude to pay what they want to an employee. Flat organizations that are flexible, have a higher tolerance for ambiguity, and encourage lateral or cross functional movement would be good candidates for broadbanding. Broadbanding is still around, although it is compenwation far less press than it did in the nineties. April 28, The Advantages and Disadvantages of Broadbanding Broadbanding is the term applied to having extremely wide compnsation bands, much more encompassing than with traditional salary structures.