Editor's Note: It is interesting to watch concepts that came into play and popularity during an earlier era be "rediscovered" (and sometimes even "repurposed") by the profession. Ah, the arc of history. Case in point today: broadbands.
WorldatWork, in its glossary of reward terms, provides us with an appropriately succinct definition.
Broadbanding: A pay structure that consolidates a large number of pay grades and salary ranges into much fewer broad bands with relatively wide salary ranges, typically with 100 percent or more difference between minimum and maximum.
On its surface, the appeal of this is easy to understand. Fewer "grades," coupled with wider ranges sounds like less structure, less bureaucracy, less administrative work and more flexibility. In theory, that's true. In practice, it can be a little more complicated. The complications arise because broadbanding, at least as it was originally conceived, wasn't designed to support the traditional job-based work and pay program designs that are still the norm at many (perhaps even most) organizations. It was meant to support more broadly-defined roles, to support and reward lateral growth and career development.
When you collapse a pay structure into fewer, wider salary bands, at least in the "pure" sense of broadbanding, you effectively give up the control point (market reference or midpoint) of a traditional salary range. Which makes perfect sense if you've moved away from job-defined work and pay, and are no longer concerned with setting and managing salary opportunity based on the attributes and value of a discrete job - if you are moving instead to managing pay opportunity by the skill, competency and/or performance of individuals within more broadly defined classes of work.
The issue with - and my personal objection to - broadbanding is when it is chosen simply as an easier, more flexible way to manage job-based pay by organizations that have not invested in the processes required to manage individual-based pay. A pure broadbanding approach leaves these organization with a very wide band of salary possibility, now less a meaningful control point. They've removed the guard rails that control by job used to offer, made the margin for error now alarmingly wide, and created a system whereby effective salary management demands an ability to define and defend how individuals should paid within that wide range of possibility without the necessary support systems. They encounter issues in areas like career advancement, when expectations born in the age of traditional jobs bump up against the new broadbanding realities and things like promotional opportunities vanish. And yes, I know that many organizations will address this by adding a series of control points and sub-bands within their broad bands, to provide more guidance and control to salary decisions. To which I say: Gosh, that starts to sound a lot like a series of traditional salary ranges.
Here's the thing though. As we get better and more sophisticated in HR analytics, in understanding and measuring how employees create value in their work, perhaps we'll have a new data-grounded, person-based valuation foundation to pair up with a broadband approach. Perhaps an alliance between rewards and analytics will lead us to a new renaissance in banding, featuring rigorous approaches to measuring how people grow in value across a broadly defined work class. A BroadBanding 2.0 (or 3.0 or 4.0... this cat's had a lot of lives).
Or perhaps the precision and rigor of analytics, as it gains a stronger foothold in rewards, will lead us in the opposite direction - to more narrow and precise salary opportunities.
Your thoughts?
Ann Bares is the Founder and Editor of Compensation Café, Author of Compensation Force and Partner at Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys hiking, reading and hanging out with family in any spare time.
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