What is Broadbanding?
Broadbanding is a pay structure that differs from traditional methods by offering much more flexibility. Instead of the focus being on the employee’s position within the company, more emphasis is placed on the employee’s development in terms of skill. In theory, this means that there is greater opportunity for an employee’s wage to increase as more value is placed on their skill and knowledge rather than on climbing the career ladder.
In recent years, there has been a great deal of interest in moving away from traditional job grading systems.
Organisations have taken cost and complexity out of their job structures by reducing the number of levels from top to bottom. It is inevitable that pay structures with a large number of levels lead to ‘grade hunting’, as people search for small changes in their responsibilities to justify a re-grading and a shift in pay. Additionally, such complex pay grading arrangements have traditionally consumed a great deal of management time simply to administer and maintain.
Against this familiar background, the appeal of broadbanding is clear. Rather than have multiple pay grades, you can simply use broadbands to offer employees the opportunity to increase their wages and remove or reduce the issue of grade hunting. For example, a job structure which might previously have included 20 or more pay grades can be described in six to eight broadband levels.
This approach offers clear benefits such as:
- Maintenance becomes significantly less arduous
- Employees are less inclined to build empires instead of acquiring competencies or driving performance
- Pay management is radically simplified