Question

Discuss when you think a broad banding pay structure might work best and why. If you have any experience either designing and/or participating in such a pay system, please share your experiences with the class and discuss the pros and cons of the system in which you are familiar.

Answer 1

The organisations where there are a number of lower level jobs that require multiple type of skills and few top level roles where very few specific skills are required, are the right type for broad band pay structures. It has  higher number of lower salary bands and fewer top level salary bands.

Forms having Broad banding pay structure have a clearly defined hierarchy. The system promotes internal movement within organisation with more emphasis on the skill sets of employees rather than pay. It encourages opportunity of development of a broad range of skills among employees and increases transparency. On the negative side, this type of pay structure hinder the opportunity of promotion among the employees where an employee's pay increases with his /her skills without gaining promotion. Such system might create disgruntled and dissatisfied employees. This type of structure also prevents the company and its employees from keeping up or be aware about the market trend of salaries for a given position.