Broadbanding Programs

Broad Banding is a variation of traditional salary programs, which replaces multiple grades and ranges with a limited number of wide ranges. Employees move through salary ranges without traditional promotions or job delineation, based on individual skill attainment, and expansion of duties, rather than on any prescribed time pattern.  Unfortunately, many companies adopted this concept over the last twenty years, only to find out that while it works in some situations, it doesn't work in every circumstance.

Design Features:

1. Substantially fewer grade levels and titles.
2. Multiple job levels are combined into a single wide salary range.
3. Large range spreads, e.g., 75%, 100% or more vs. traditionally 40% to 60% ranges.
4. Provides a method to recognize dual career tracks (management and professional).

Advantages:

• Better accommodates a flat organizational hierarchy.
• Emphasizes skill development rather than vertical promotions.
• Eliminates need to establish artificial job titles and hierarchy.
• Provides greater organizational flexibility since the organization is not encumbered by narrowly focused job titles.
• Simplifies salary administration by recognizing evolutionary promotions that are not bona fide changes in duties and responsibilities.

Disadvantages:

• May not be compatible with the organization's culture and is less successful in highly structured organizations.
• Loss of control points for salary planning often results in overpaid employees
• Usually requires greater emphasis on monitoring due to lack of controls.
• Difficult to use as management tool for determining relationship between jobs.
• Limits promotional opportunities.
• Is inconsistent with traditional job titling and career families found in most salary surveys.

 

Although Broad Banding was the “rage” a few years ago, many companies have subsequently returned to a more traditional salary structure, since they found the disadvantages, particularly reduction in legitimate promotions between Junior – Journeyman – Senior levels was an issue, and this structure increased costs. 

Conversely, many companies found that the ability to lump their officers into a limited number of broad ranges allowed them to provide appropriate levels of compensation without having to differentiate between senior management.  

To find out more on how Compensation Resources, Inc. can help your company with Broad Banding, please Diana Neelman or one of our other consultants at 877-934-0505.