Broad Banding

Written by Patricia Skinner
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The concept of broad banding in the business world is relatively new. It is a way of making sure that everyone gets paid what they're worth to the company, and can also be structured to ensure that individuals who outperform their peers are given compensation to match their contribution to the company's success. This will hopefully have a positive impact on employee retention and will help to attract the kind of high caliber employees that most organizations seek. It will also make it easier for the human resources department to settle pay issues with employees.

The Reasons for Broad Banding

Many larger companies and organizations that have a lot of workers find it expedient to develop a broad banding strategy for salary levels. These will consist of different categories of base salaries that will fall within set limits. Usually, the hierarchy consists of three or four bands which are set out as follows.

Band one, or the top band will consist of those who are responsible for the short and long term development of an organization. Under this you will have band two, which will usually consist of the executive branch of management. Under that, band three will be top level professionals. At the bottom of the plan will be band four, and includes other classifications of workers.

Each individual base salary will only be negotiable within the upper and lower limits set by the broad banding plan for his or her category. On top of the base salary will come short and long term incentives as applicable for each section of the broad banding hierarchy. Different kinds of incentives are usually applicable to each level of the broad banding program.


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