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.
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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