Presentation

on
BROADBANDING

Presented
by:
Chow
Luckya
What is Broadbanding
 Broadbanding is defined as a strategy for
salary structures that consolidate a large
number of pay grades into a few "broad
bands.

 Broadbanding is a method of grouping jobs
and determining pay that makes
compensation administration more flexible
and more responsive to the needs of
changing organizations. Broadbanding
eliminates the present hierarchical grading
structure and narrow salary ranges. In
broadbanding, jobs with similar
responsibilities and skill requirements are
grouped in "bands" of job families, and pay
Broadbanding
When a system is broadbanded, one of
the main objectives is to reduce
salary ranges within a job family. The
broadband could be considered
successful if it reduces the salary
ranges.


The majority of organizations have

been successful, especially in the
area of management/supervisory
employees.

Objective & Goals
Decentralize compensation
management & administration
Reduce the need for reclassification
reviews and improve speed of
processing
Provide a mechanism to reward
employees for skills and
competencies outside of annual
salary recommendation process
Provide more flexibility in pay for
new hires
Attract & retain employees in high
skilled areas
Maintain internal equity
Allow for geographic differentials
 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:


 promote career development / learning

 empowering managers
 avoid multiple pay structures
 Focus on the person instead of the job
 promote fewer, broadly-defined jobs
 Broadbanding eliminates the possibility for
Benefits of Broadbanding
 Broadbanding has been successfully
implemented in large, hierarchical
organizations which attempted to flatten
their organizations and remove levels of
management. For example,
organizations that had eight levels of
management could eliminate four levels,
widen the salary ranges of the remaining
four levels, and simply slot each
manager into one of those ranges.With
broadbanding, a manager can more
easily encourage his/her employees to
broaden their skills and abilities. This is
Cont…
 Broadband pay structures encourage the
development of broad employee skills,
because non-managerial jobs are
appropriately valued and skill
development is rewarded. Additionally,
a broadband pay structure is not as
sensitive to changing market pricing
conditions, so they cost less to
administer and manage over time.


 In a broadband pay structure, the

numbers of salary grades are
consolidated into fewer, but broader,
Elements of Broadbanding
 Pay Grade
 A pay grade is a step within a compensation system
that defines the amount of pay an employee will
receive. The pay grade is generally defined by the
level of the responsibilities performed within the
job description of the position and the length of
time the employee has performed the job.


 Salary Range
 Range is the range of pay that has been established
to be paid to employees performing a particular
job or function. Salary range generally has a
minimum pay rate, a maximum pay rate, and a
series of mid-range opportunities for pay
increases. The salary range is determined by
market pay rates, established through market pay
Cont…
 Bonus Pay

Bonus pay is compensation over and above
the amount of pay specified as a base salary
or hourly rate of pay. Bonus pay is used by
many organizations as a thank you to
employees or a team that achieves significant
goals. Bonus pay is also used to improve
employee morale, motivation, and
productivity
 Variable Pay
 Variable pay is employee compensation that
changes as compared to salary which is paid in
equal proportions throughout the year. Variable
pay is used generally to recognize and reward
employee contribution toward company
 Salary Range with Broadbanding

40000
Range

30000
Pay

20000

12000
A B C
Pay Grade
Learning


 Broadbanding is an attractive alternative rigid,

structured, specialized, and hierarchical organizations.
A solution that captures the benefits of both
broadbanding and traditional salary structure includes:


• Salary ranges with a 40% to 50% spread between the

salary range maximum and minimum.


• A limited number of broad and general job

descriptions.


• A flat organization structure with a limited number of

pay levels.


• Advancement criteria which includes the attainment

of a broad set of skills.

 THANKS