BROADBANDING

Definition:

Broadbandingis defined as a strategy for

salary structures that consolidate a large

number of pay grades into a few "broad
bands.
Broadbanding (or 'broad grades') is the
consolidation of traditional pay structures,
consisting of many, narrow pay ranges into a
few, wider ranges or bands.

Purpose:
Broadbanding is intended to support agile,

flatter, faster-paced, de-bureaucratized

organizational cultures

In a broadband pay structure, the numbers of

salary grades are consolidated into fewer, but

broader, pay ranges.
In broadbanding, the spread of the pay ranges
is wider and there is less overlap with other
pay ranges.
Broadbanding evolved because organizations
want to flatten their hierarchies and move
decision-making closer to the point where
necessity and knowledge exist in
organizations.

Use:
Broadbands are imperative for companies
with competency-based pay programs, but are
also used in companies with longevity- and
performance-based pay programs. Companies
employ broad banding to:
facilitate change
avoid multiple pay structures
drive pay decision-making downward

(empowering managers)
provide greater latitude in management pay
decisions

promote lateral moves or in-grade promotions

reduce use of promotions to increase pay
promote career development / learning
reduce the need for precise job

analysis/evaluation
promote fewer, broadly-defined jobs
focus on the person instead of the job
facilitate quick responses to changing goals
and circumstances

Structure:
Companies adopting a broadband structure

generally reduce the number of salary ranges

by one-half to two-thirds. The broadband
range spread is generally 75% to 125%. It
may be greater.
Most broadbanding companies use 10 bands:
2 for the executive level
4 for the managerial and professional level
4 for the non-managerial or hourly level

Midpoints:
Broadbands typically do not have a single

midpoint; they have a minimum and

maximum. Broadbanding companies use a
range of techniques for control purposes,
including a series of reference points relating
to career levels in a job family, market based
zones linking a group of benchmark jobs to
anchor the structure to the market, and socalled shadow ranges.

Wide (or Fat) Grades:

Some organizations use wide grades (also

called fat grades). These are simple traditional

pay ranges that have been modified so that
there are fewer of them than previously used.
Their minimum-to-maximum spread is greater
than tradition-bound ranges of the last century.
These structures may help to counter grade
creep and make for a more realistic approach
to pay decision-making, but, typically, do not
free a company from traditional pay
administration practices.

Prevalence:
Broadbands (and career bands) are still

viewed as a novel approach to pay, yet to be

proven workable. While companies continue
to move to broadband pay programs,
anecdotal reports indicate that many earlyadopters are returning to more traditional
(albeit relatively wide) pay structures.

Success:
Successful use of broadbanding requires that:
top management has a clear goals,

understands the pros and cons, commitment

all managers are mature and highly trained in
HRM and compensation

Pitfalls:
Before moving to broadbanding, companies should consider
the following:
Broadbanding demands that managers are aware of, and
can interpret, market pay data
Broadband control points are not precise for individual jobs
Broadbanding increases the potential for employees to
float to the top of the band, way out of sync with the
market
Broadbands lack the automatic cost-control mechanism
inherent in narrow pay ranges
Broadbanding eliminates the possibility for precise job
analysis/evaluation