Broadbanding | Meaning and Definition

What is Broadbanding in HR?

Broad banding in HR is a Compensation Administration method that consolidates many narrower pay grades into fewer bands with wider salary ranges. The purpose is to make it easier for communication among employees and management and facilitate employee movement across the organization. 

Broadbanding may also be used to reduce or eliminate the barriers to entry for certain jobs, making it easier for employers to attract and retain top talent. Additionally, this compensation structure can help organizations better align pay with organizational strategy and objectives. When done correctly, broadbanding can improve overall employee morale and engagement. 

The Right Time to Create Broadband Pay Structures

It depends on several factors, including the size and structure of your organization, the nature of your business, and the competitive landscape. There are a few general guidelines you can keep in mind when thinking about when to implement broadband pay structures. 

First, it’s important to consider whether you have the internal capacity to create and manage a broadband pay structure. Broadband pay can be complex and time-consuming to administer, so you’ll need to ensure you have the resources to do it right.

Second, think about whether your employees are ready for a broadband pay structure. Asking employees to assume more responsibility for their compensation can help you decide. 

To help employees develop their skills, broadbanding places a higher value on professional development than internal job advancement. There are fewer career opportunities in a flattened workplace, so utilizing a broadbanding method enables bigger pay raises.