Broadbanding is a performance-based pay structure with broad salary ranges and fewer pay grades. It is an alternative to the traditional pay structure that allows more flexible roles within the company and more focus on career development.
In a traditional pay structure, there is a larger number of pay grades with a small salary band. This means that if an employee wants to make more money they would very likely need to get a promotion and start a new role in the company with different responsibilities. With broadbanding they could stay in the same role but still make more money as their skill level increases. This allows employees to refine their skills by staying in a certain role for longer and gives employees who might not want to enter a management role a way to increase their pay.
This type of pay structure works particularly well with smaller teams, or creative agencies where employees may have to fit a more flexible role. Any team with non-traditional roles works well with broadbanding because it doesn’t require roles to be as strictly defined. It also makes it easier for pay to be adjusted as the roles and responsibilities of an employee change or increase as needed.
For smaller teams, this may mean somebody who has to wear many hats and fill several smaller roles will be able to be defined under one pay band. With a traditional pay structure, the roles are more defined and it might not match the skillset of the particular employee or fit the specific needs of the company.
A creative agency, on the other hand, might use broadbanding because they need multiple employees under the same role but with different skill sets. It allows a variety of talents needed to collaborate effectively and gives employees time to refine their skills in a particular role.
A larger team, however, would have difficulties using broadbanding because with a larger number of roles a simpler, easy-to-replicate, pay structure is needed. While there are many benefits to broadbanding it does require a lot of attention to ensure employees are being paid fairly. One problem that may occur is inequality due to the managers’ ability to decide how much different employees in the same role get paid. A manager’s personal biases can result in unfair pay for employees of different races, genders, sexualities, and religions. On a smaller scale, this is very preventable, especially with the use of a credible job evaluation system and clear policies. With large companies, however, broadbanding can make the pay structure more confusing and make employers less likely to spot these inequalities.
Broadbanding can be an effective tool to acquire the talent needed for a smaller, non-traditional structure. It is helpful for certain employers to grow their business and find employees to fit the specific needs of their company. It can also allow employees to remain in a certain role for longer periods of time while still having an opportunity for growth. If you are a small business, Broadbanding could be a great way to improve your business structure and benefit both you and your employees.