States a position on whether broad banding can be successfully competitive in selected work environment. Broad banding is known for taking different salary grades and combining them into only a few different bands with bigger ranges usually resulting in one minimum wage and on maximum wage for the band, these bands usually include a wide variety of various jobs it is hard to establish a midpoint (Milkovich, Newman, & Gerhart, 2011). Using broad banding as a compensation plan most definitely has not only its advantages for companies and employees but has disadvantages for companies and employees that go hand in hand with the advantages.
Advantages of utilizing broad banding include but are not limited to:
- Allows the company more room in determining job duties and responsibilities
- Job descriptions are broader therefore, not signaling any specific position with specific responsibilities
- Reduces the number of levels of positions therefore, removes some of the more hierarchy structure that some companies have
- Allows employees to get a feel for different roles without having to initiate either a promotion or a demotion in order to expose the employee to the different job roles
- Gives more authority to managers to establish pay wages by removing the pay restrictions that are usually overseen by HR (Dance, 2011)
- Helps develop different job skills among a group of employees
Acts as a sense of employee training, by employees having the opportunity to experience other roles within the band this helps establish more opportunities for employees to grow and develop due to experience in other areas within the company (Milkovich, Newman, & Gerhart, 2011) Some of the disadvantages that are included with broad banding include but are not limited to:
- Too much power could be given to the managers and hey could establish an unfair or non-competitive pay wage for a specific position
- Reduces the number of promotion opportunities for company employees
- Could increase training budget therefore causing a reduction in other areas in order to compensate for the increase in training budget (Dance, 2011)
- Employees need to be trained on different areas more often due to the changes because the bands are so broad and encompass so many different responsibilities and duties
- Makes bench marking jobs impossible because of the broad spectrum of jobs included within the bands
- There is no mid point salary range when you compare to the market as the bands remove all mid point salaries (Milkovich, Newman, & Gerhart, 2011)
With some of the advantages and disadvantages of broad banding compensation plans set out, I have determined that I believe that my previous employer acted on using this system to a certain extent.
My job was so varied by different duties and responsibilities that it was impossible to put a job description on my position. Also, the wages ranged in large amounts for all employees who held any type of manager position within the company.
My job as a ‘Property Manager’ was not as cut and dry, I had no room to advance, or to complete tasks that were at the next level higher, however, I commonly completed and did jobs that were at levels below my position, therefore, removing any promotions and demotions within the company. The owner determined what to pay based off the work that we completed and not based off of the industry for Property Managers. For these reasons I do believe that my employer used the broad banding theory, however, I do believe that this caused more confusion among the employees knowing their job roles, determining what their career future held for them at the company as well as not really knowing the value of their job.
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