How does broadbanding work?

Broadbanding is the use of salary structures with significantly fewer grades (or bands) and much wider ranges than those traditionally used. Jobs that previously were covered by as many as four or five grades typically are consolidated into a single band with one minimum and one maximum point. Salary range midpoints usually are not used because a band encompasses so many jobs of differing values. However, sometimes a band may be composed of several zones.

The implementation of a broadbanding program requires a change in thinking in terms of jobs, rewards and career development, in order for it to be successful. Corporate cultures that support broadbanding tend to be looser and more flexible.

Broadbanding offers several advantages.

Greater flexibility. Broadbanding offers greater flexibility to employers who need to define job responsibilities more broadly. Broadbanding facilitates this flexibility by allowing an employer to add to or change the responsibilities of a job in response to organizational needs without reevaluating or reclassifying the job.

Career growth. Broadbanding facilitates career growth and development for employees without many of the administrative burdens traditionally associated with promotions and transfers.

Fewer layers of management. Organizations that have streamlined their organizational structure through merger, reorganization and downsizing will likely find value in broadbanding because the process of streamlining eliminates layers of management and creates a flatter organization.

Deemphasizes promotions. Broadbanding can help employers deemphasize promotions by shifting employees' focus from higher salary grades to genuine career growth.

Reward new skills. Employers who use broadbanding are able to recognize and reward employees for acquiring new skills and assuming more difficult tasks within their current jobs.

Makes transfers easier. Broadbanding can facilitate internal transfers because salary grades are less of an issue under broadbanding; employees are more likely to consider moving into a new job or different business unit without a promotion or advancement to the next job level.

Emphasizes individual performance. Broadbanding allows employers to place more emphasis on individual performance because pay is no longer affected by mechanically determined salary ranges and rigid increase guidelines.

Recognizes good performance. Wider salary ranges provide employers with more room to distinguish between good and mediocre performers. Accordingly, employers need to have sound performance management systems in place to ensure pay is administered appropriately.