What is Broadbanding?

Whether you're a beginner or an expert, you will find this Glossary useful.

Broadbanding is a method for evaluation and construction of job grading structure that exchanges a large number of narrow salary ranges for a smaller number of broader salary ranges.

broadbanding definition

Definition of Broadbanding

Broadbanding is a method for evaluation and construction of job grading structure that exchanges a large number of narrow salary ranges for a smaller number of broader salary ranges. Broadbanding aids in establishing what is required to pay for a specific position.

This type of pay structure encourages the development of broad employee skills and growth while reducing the opportunity for promotion.

The advantages of broadbanding

• It streamlines hierarchy structure within the organization

• It promotes and facilitates internal movement within the organization and emphasizes other attributes of a position, other than the pay grade which is already disclosed

• Gives more transparency and added trust in management

The disadvantages of broadbanding

• Reduces awareness of external market salary rates.

• Broadbanding leads to lack of promotions within the organization; it allows organizations to increase pay and offer opportunities for training without promoting employees.

• Broadband pay structures aren’t sensitive to changing market conditions.

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