Broadbanding

Broadbanding is a compensation strategy in which many traditional pay grades are collapsed into a small number of broad salary bands that span wide pay ranges. Under broadbanding, employee progression is often tied to acquiring skills, competencies, or performance rather than moving up a long ladder of narrowly defined job grades. Bands are typically defined by market data, internal value, and organizational needs.

The approach emerged in the latter half of the 20th century as organizations sought flatter structures and greater flexibility. It has been used by some corporations and public-sector bodies to simplify administration, increase mobility across job families, and speed decision making about salaries and promotions.

In practice, bands replace multiple grades with a few bands, each with minimum and maximum pay and often with a wide range spread. Job evaluation and market benchmarking determine the band level, while promotions may involve moving within a band or occasionally crossing a band with a rebenchmark. Some models pair broadbanding with competency or skill-based pay and with formal performance management.

Benefits include greater organizational flexibility, faster career progression, simplified administration, easier external market adjustments, and improved cross-functional mobility. It can support flatter structures and align compensation with current skills rather than years of service.

Challenges include potential pay compression and inequities if bands are too wide or not well aligned with market pay. The system requires strong governance, robust performance management, transparent policies, and ongoing market benchmarking. It can be difficult to administer without reliable job evaluation and career framework.

Implementation considerations include designing bands around market data, defining clear minimums and maximums, ensuring governance for promotions and pay changes, and communicating expectations to employees. It is not a universal solution and may be more suitable for organizations undergoing significant restructuring or adopting flexible, competency-based careers.

Overall, broadbanding aims to increase flexibility and efficiency in compensation while preserving internal equity and motivation through skill development and performance outcomes.