Broadbanding refers to organizations that decide to modify their compensation levels to go from a large number of narrow salary ranges to a smaller number of broader salary ranges.
What Is the Definition of Broadbanding?
The definition of broadbanding is the consolidation of similar job classifications into a broader salary range instead of different smaller salary ranges.
For example, instead of having a salary range for each position in the FOH staff, organizations can decide to only have one broader salary range that encompass all the FOH positions.
How Does Broadbanding Work?
Broadbanding implies having broader salary ranges. For example, a normal range spread would be between 25 and 60% whereas a broadband structure would be between 80 and 300%.
Broadbanding allows employers to offer better salaries to employees who have better skills without being restricted in a small salary range depending on the position.
Which Businesses Use Broadbanding?
Any type of business can use broadbanding. Typically, it is used in businesses where employees tend to stay within the same company and develop their skills to take on more responsibilities.
Broadbanding is often use in the following businesses:
What Is an Example of Broadbanding?
A company can decide to combine all of their marketing positions under one salary range that include the least-skilled position and the highest-skilled one. The salary range could go from $45,000 to $150,000.
What Are the Advantages of Broadbanding?
Advantages of broadbanding include:
- Offering better flexibility for employee compensation
- Motivating employees to acquire new skills to have a better compensation within the salary range
- Reducing the need to reassess the pay range regularly
- Encouraging internal mobility
- Increasing employee satisfaction
- Streamlining the salary structure
- Improving transparency
What Are the Downsides of Broadbanding?
Downsides of broadbanding include:
- Not always taking into consideration changes happening in external markets
- Reducing the opportunities for promotions
- Creating a perception of pay inequity