HRM textbook

CHAPTER 11 ESTABLISHING STRATEGIC PAY PLANS 379
FIGURE 11-11 Broadbanded
Structure and How It Relates
to Traditional Pay Grades
and Ranges
Band B
Wage rates, dollars
Band A
Grades and evaluated points
easily, without worrying about the employee s moving outside the relatively narrow
rate range associated with a traditional narrow pay grade. Broadbanding therefore
facilitates flexibility.
PROS AND CONS Companies create broadbands for several reasons. The basic
advantage is that it injects greater flexibility into employee assignments. 89 It is especially
sensible where firms organize into self-managing teams. The new, broad salary bands
can include both supervisors and subordinates and also facilitate moving employees
slightly up or down along the pay scale, without bumping the person into a new salary
range. For example, the employee who needs to spend time in a lower-level job to
develop a certain skill set can receive higher-than-usual pay for the work, a circumstance
considered impossible under traditional pay systems. 90 Similarly, one expert
argues that, say, point plans, may actually encourage inadaptability. 91 He says that jobs
narrowly defined by compensable factors such as effort are unlikely to encourage job
incumbents to be flexible. Instead, the tendency may be for workers to take a that s not
my job attitude and to concentrate on their usual assigned duties.
On the other hand, broadbanding can be unsettling, particularly for new employees.
For example, The Home Depot has used broadbanding for more than 10 years, and
when employees want to learn something new, they play to the level [on that project]
that they re capable of, says the firm s head of information systems. Moving among jobs
is motivating once you get used to it. However, it can make a new employee feel adrift:
There s a sense of permanence in the set of job responsibilities often attached to
job titles, he says. That sense of permanence isn t nearly as clear when employees move
frequently from project to project and job to job. 92
broadbanding
Consolidating salary grades and ranges
into just a few wide levels or bands, each
of which contains a relatively wide range
of jobs and salary levels.