If you’re looking to change up your evaluation process, broadbanding might be the answer. Broadbanding is a method of job grading that you can use to establish a minimum and maximum pay for any position. Define what a job is worth and pay your staff what they deserve for their work. There will be a wider range of compensation available to employees, meaning they will feel less need to get another job somewhere else in order to earn more. Show that you value your employees by switching up your evaluation process.

What Is Broadbanding?

Broadbanding provides a way for you to evaluate roles to define the pay range. The broadbanding structure of job grading changes traditional salary structures into something that makes more sense. It takes narrow salary bands and widens the scope of pay for a position. Conventional methods can provide relatively small banded salary ranges a lot of the time. Traditional job evaluation can encourage promotion rather than staying in a role for a long time, as there is not much space to move up in pay.

When Should You Switch to Broadbanding?

Does your company need more flexibility in allotting compensation? If you’re not currently using job evaluation to determine the income of your staff, you should use broadbanding. This method focuses on rewarding skill development. This encourages people towards career development and improvement at their jobs. They can remain in the same role for longer while getting paid a lot more for it when they develop more skills relevant to the position.

Broadbanding pay structures are well-suited to flat company hierarchies. There are few opportunities to get promoted in this type of business, so broadband for salaries provides another way to value your people.

Broadbanding is usually based on 80% - 200% of the median pay. For example, if a median salary for a position is $60,0000. The minimum at 80% of that will be $48,000. The maximum at 200% will be $120,000. That’s a massive range, so it’s easy to move people up in pay when they improve.

Pros of Broadbanding

What are the advantages of broadbanding your salaries?

Encourage Career Development

Many companies wish that people would stay in roles longer. However, this is inherently flawed as their pay structures encourage people to aspire for promotions to get paid more. When pay has a much wider range based on skills, this promotes career development.

Value Non-Managerial Roles

Often people don’t start to get paid decent amounts until they start managing others. This is a shame, as we also need people in our companies with in-depth technical knowledge. Moving to broadbanding offers us a way to pay people plenty, even if they don’t want to become managers.

Streamline Hierarchy

If your business currently operates on a vertical hierarchy and you want to change this, a broadbanding pay program can help. Reduce your levels of management while still paying people what they are worth. This will make your structure easier to understand and reduce the amount of bureaucracy and red tape.

General Roles Rather Than Specialized

It’s useful if people in your company are good at a number of things rather than being highly specialized. This allows them to take on numerous different responsibilities, as they have a broad range of skills. Traditional pay structures encourage people to learn a narrow range of skills. If you want each staff member to have a more diverse skill set, broadbanding pay structures are the way to go.

Manager Empowerment

As part of moving away from a vertical hierarchy, broadbanding can help move decision-making down the chain. This empowers managers to make pay decisions for their staff rather than waiting for upper management to decide. This is great for employee engagement, staff satisfaction, and employee-manager relationships.

Adaptability

Broadbanding can make your organization far more adaptable to external changes. When people and positions need to evolve to keep up with the pace of change and technology, broadbanding makes it easier. Rather than changing up your positions, you can simply get your current staff to upskill. There is no need to move jobs when you have broadly defined skills required for each role.

Cons of Broadbanding

While it may be an excellent idea for some companies, there are also some disadvantages of broadbanding.

Hard to Compare

Usually, a company will compare the pay for a role to the market rate. This is so that you know how much you offer compared to similar positions at other companies. The employee can also know whether they will be paid more should they move companies. Broadbanding structures make it hard to compare your pay against the market rate. You may be completely overpaying or underpaying your staff.

Midpoints Are Not Well Defined

The whole point of broadbanding is creating wide salary ranges. This runs into trouble when it comes to establishing a midpoint. These are usually not well defined as the range is so vast. That can make it challenging to determine a salary for any new employees.

Different Rates of Increasing Pay

Sometimes broadbanding can cause issues amongst staff whose pay might increase at different rates. Some people can move up the scale quickly as they upskill. Other staff might deem this unfair if their income is not moving even though they feel that they, too, have learned new skills. To get around this, you can define how and when pay will increase to make it clear to everyone what to expect.

Are you ready to shift your business into becoming more focused on its people and their skills? By using broadbanding pay structures, you can lower your staff turnover by keeping people in their roles for longer. Your staff will also have an increased number of skills that cover a broader range of areas. You can have a happier, more well-paid staff. This will increase organizational productivity, and you can see your profits soar.