Individual Pay Ranges
Individual pay ranges are quite similar to individual pay rates, but instead of one fixed figure, they allow for some flexibility. Ultimately, employees are given a salary within a scale, providing a clear framework on how they can progress. For example, employees might begin their employment at the lower end of the pay grade and eventually advance to the top salary for their role.
Individual pay ranges are still effective in assigning value to an employee; however, they combine the value of the individual with the value of the role, creating a skills-based pay structure. If someone is not as experienced, they will be placed on the lower end of the pay spectrum, whereas someone with plenty of experience will be on the upper end. This is a much more engaging prospect to employees as they are more productive and motivated by the potential for pay progression.
Narrow-graded Pay Structures
Narrow-graded pay structures are typically comprised of 10 or more grades in which jobs of roughly equal value are placed. Employees are able to advance through these grades on an annual or bi-annual basis. Despite this, as the name suggests, the grades are narrow, meaning employees can progress to the top grade relatively quickly. As a result, they may lose job motivation once they can advance no further.
Broad-graded Pay Structures
Broad-graded pay structures are usually formed of six to nine grades with a wider salary band. This creates further distance between grades, making it a competitive pay structure as the process to reach the top grade is more complex. Therefore, employees remain motivated for longer as they don’t feel as though they have nothing new to work towards.
Broadbanding (also known as pay band structure) normally involves around four or five pay bands, each of which have no limit on pay progression. It sets out a clear path of how an employee can reach their next pay advancement, increasing productivity as they are more motivated to achieve the next stage in their career.
Despite this, broadbanding does present the risk of employees moving into a more demanding or challenging job role without receiving a pay rise. This is because some job grades will be classified under the same band regardless of their level of responsibility. As a result, employees can be made to feel demotivated and demoralised which, in turn, decreases employee performance and engagement.