Broad BandingCompensation Management

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Broad banding

• Broad banding is a job

grading structure that falls

between using spot salaries

vs. many job grades to

determine what to pay

particular positions and

incumbents within those

positions.

Broad banding

• While broadbanding gives

the organization using it

some broad job

classifications, it does not

have as many distinct job

grades as traditional salary

structures do

Broad banding

• Thus, broadbanding reduces

the emphasis on ‘status’ or

hierarchy and places more of

an emphasis on lateral job

movement within the

company.

Broad banding• In a broadbanding structure

an employee can be more easily rewarded for lateral movement or skills development, whereas in traditional multiple grade salary structures pay progression happens primarily via job promotion. In this way, broadbanding is a more flexible pay system.

Broad banding

• This flexibility, however, can

lead to internal pay relativity

problems as there isn’t as

much control over salary

progression as there would

be within a traditional multi-

level grading structure.

Zones in Broad band structure

Broad banding• For a suitable organization in

the right cultural setting, broadbanding can do the following:– Reward performance more

efficiently – as the pay ranges are wide, the company has the flexibility to reward a star performer, even when they aren’t getting promoted.

Broad banding• For a suitable organization in

the right cultural setting, broadbanding can do the following:– Take the emphasis off of job

evaluation – because the number of levels have been reduced, job evaluation can be streamlined as there aren’t as many distinct grades that need to be considered when slotting a job into the structure.

Broad banding• For a suitable organization in

the right cultural setting, broadbanding can do the following:– Manage a flexible/mobile

workforce – for companies that have staffing needs that change frequently or are difficult to predict, or work within a business environment that is in flux, broadbanding offers a program that is easier to maintain than a traditional system with many distinct levels.

Broad banding• One concern noted by

companies that have implemented broadbanding is that compensation costs may go up. This is due to the wider than normal band taking away that more gradated top end control on salary levels.

Broad banding• This can be effectively

managed through the use of market data, in order to help managers to validate their pay decisions for a particular employee to the external market before proceeding to give higher than normal pay increases.

Broad banding

• Broadbanding, like other

grading systems, relies on

the buy-in of all key

stakeholders including the

business managers, HR

managers, and employees.

Broad banding

• Tailored communication to

each of these groups will go

a long way towards ensuring

the successful

implementation of a

broadbanding program.