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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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January Learn how and when to remove this template message. Retrieved from ” https: In this way, broadbanding is a more flexible pay system. Some organizations use wide grades also called fat grades.

The trend is toward common-sense salary structures, with plenty of room to compete for talent and continue to reward stars without busting through a pay grade ceiling. That can easily happen with broadbanding. It was a huge help in understanding broadbanding and helping with my assignment.

The Advantages of Broadbanding

Their minimum-to-maximum spread is greater than tradition-bound ranges of the last century. Thus a bias exists against the broadening of skills. Hroadbanding weakens the linkage between salary growth and skill development for the next higher-level, since it is so far off as to not be a motivator. Views Read Edit View history. The perception of HR as a regulating gate keeper to preserve the salary structure diminishes.


Thank you for this article, it helped me work on my Compensation course assignment! In this figure, the company’s previous six pay grades are consolidated into two broadbands.

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At the close of the 90s, a Wyatt survey of 1, companies found that less than one in ten used broadbands. Sometimes an organization has become too hierarchical for the strategic direction of the company; finding it has become too slow to react, taking too much time to get information from the top down and even less effective at getting messages from the lower rungs up to the ears of senior management.

Whether we like it or not, some great person-to-job matches just do not happen because broadbaning the way a job has been classified or positioned with an assigned salary band. As with all compensation methods, companies should carefully weigh broadbanding’s pros and compensatuon to ensure to it fits with their organizational culture and business goals.

April 28, The Advantages and Disadvantages of Broadbanding Broadbanding is the term applied to having extremely wide salary bands, much more encompassing than with traditional salary structures.

This absolutely broaadbanding reduce the push-pull between the hiring manager and the human resources organization. This makes pay take a back seat and puts forward other attributes of a position, encouraging internal mobility and potentially more developmental assignments.

After all the hype, it turns out that not that many organizations thought broadbanding is their silver bullet. Do you have a topic you would like Compensation Today to cover? Write us at comptoday payscale. broaadbanding

The Advantages of Broadbanding

Broadbands typically do not have a single midpoint; they have a minimum and maximum. Similarly, if you want the person to learn about a job that happens to be in grade 3, the employee might object to the reassignment without a corresponding raise to grade 3 pay.

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How well do your employees understand your compensation plan and philosophy? This article is an broadbajdingas no other articles link to it.

Most firms end up with pay plans that slot broadbandong into classes or grades, each with its own vertical pay rate range. That also means the compa-ratio tool can not be used.

In this case, the company will need to be able to give examples to the employees of how lateral movement can enhance their career opportunities. Whereas a typical salary band has a 40 percent difference in pay between its minimum and maximum, broadbanding would typically have a percent difference. This was a huge swing of the pendulum from compensation programs featuring a zillion narrow pay grades — an even greater swing when one considers the Texas-sized “career bands” that some companies adopted.

In flattened organizations, fewer promotional opportunities exist so the broadbanding structure allows more latitude for pay increases and career growth without promotion. It only takes a few reckless managers rewarding a few individuals inappropriately to have an entire pay system called into question.

That is why some firms are broadbanding their pay plans. For example, organizations that had eight levels of management could eliminate four levels, widen the salary ranges of the remaining four levels, and simply slot each manager into one of those ranges.

The question is how wide should the salary grades be in terms of the number of job evaluation points or rankings they include?