Pay Ranges

Dear Dave
Our firm has recently announced its intention to update and modernize our job descriptions and salary administration by going to a system they are calling “broadbanding”. Supposedly, this move will allow greater flexibility to our supervisors when it comes to future pay increases. We have had a couple of tough years and my firm has made a number of other changes to our insurance benefits, profit sharing and time-off that makes us more than a little skeptical about this latest announcement. What is broadbanding and how does it work?
RD TX

Dear RD
Broadbanding is a method to flatten the formal hierarchy of an organization through reducing the number of pay levels (bands) in a salary administration system by consolidating a large number of narrow pay levels into a smaller number of pay levels but with wider ranges (broadbanding). For example, if your organization had twelve pay levels, it might condense down to six pay levels with a greater range within each band.

The wider pay ranges created under broadbanding can indeed produce more elbowroom to incrementally increase pay for staff who work to increase their skills and abilities.