The Role of Broadbanding

Wednesday, April 21, 2010

 

Broadbands are salary ranges which have been collapsed into a fewer number of ranges with those ranges typically being as much as 100% or more from minimum and maximum and often representing job clusters rather than an individual job. As organizations began to flatten their reporting structures, deal with shrinking salary budgets, HR staff reductions, and simplify their process, a method was sought out to compensate employees for this new order of reporting. Broadbanding was an attempt to address many of the issues related to the changing business world of the 1980’s and the 1990’s. By dramatically increasing the width of ranges and having fewer ranges, organizations could still offer vertical advancement without “promoting” an employee into a completely new grade or worry with “re-classification”. Organizations could grant supervisors a degree of independence to move employees into higher pay brackets within the same grade with limited oversight by the corporate compensation function.

 

Consider a traditional job family with levels for jobs from the entry level all the way to manager. Typically, each job occupied a separate salary range, separate job descriptions, and were evaluated individually. To move from one level to another required a promotion or re-classification of the incumbent’s current position into a higher grade. The former process often required a one over one level of approval. The later often required a request to the HR function to have the job re-evaluated. Depending on the organization, promotions might have to be reviewed, approved, and budgeted. To have a position re-evaluated might require the request to be scheduled for a time in the future, be reviewed by the “Job Evaluation Committee, etc.

Therefore, for an organization short on HR staff, time, experiencing exponential growth, and faced with increased completion for the skilled labor needed, enter broadbanding. Broadbanding even has a role in attracting and recruiting college and MBA graduates by use of ranges specifically associated with a given university, graduate school or specialized area of academic study. For rapidly growing organization, broadbanding offers the ability to fast track employees through what would have been several organizational levels. Thus a 3 to 5 year employee on a fast track could move from enter level to manager without ever change salary grades, and still see a significant increase in roles and responsibilities and correspondingly, compensation.

As with most things, communications is key to the success or failure of many organizational programs. Employees raised in a culture that defines “promotion” as moving from grade “A” to grade “B” may see broadbands as just one more “take-away”. While broadbands have the ability to hide many pay administration sins, failure to maintain current market alignment will eventually erode their relationship to competitive rates. Broadbanding does simply many aspects of salary administration, nevertheless, they still require skilled staff to proper evaluate and classify jobs into the various sub-divisions of the range. Managers often will require consultations as to when and how employees may move through the ranges.