{"id":126587,"date":"2022-11-02T08:53:54","date_gmt":"2022-11-02T08:53:54","guid":{"rendered":"https:\/\/www.aihr.com\/?post_type=hr-glossary&#038;p=126587"},"modified":"2024-10-29T10:21:08","modified_gmt":"2024-10-29T10:21:08","slug":"broadbanding","status":"publish","type":"hr-glossary","link":"https:\/\/www.aihr.com\/hr-glossary\/broadbanding\/","title":{"rendered":"Broadbanding"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-what-is-broadbanding\">What is broadbanding?<\/h2>\n\n\n\n<p>Broadbanding is a <a href=\"https:\/\/www.aihr.com\/blog\/compensation-planning\/\">compensation<\/a> approach that consolidates a range of similar <a href=\"https:\/\/www.aihr.com\/blog\/job-classification\/\">job classifications<\/a> into a single pay band. This encompasses a much broader range of compensation levels than traditional <a href=\"https:\/\/www.aihr.com\/blog\/salary-structure\/\">salary structures<\/a> and results in reducing the number of pay grades.<\/p>\n\n\n\n<p>A traditional salary band usually has a <a href=\"https:\/\/www.aihr.com\/hr-glossary\/range-spread\/\">range spread<\/a> of 25% to 60% in its single-step grade structure, whereas a broadband structure often has an 80% to 300% from the low-end to high-end scales.<\/p>\n\n\n\n<p>A broadband approach gives management a wider range and flexibility when it comes to paying employees.&nbsp;<\/p>\n\n\n\n<figure data-wp-context=\"{&quot;imageId&quot;:&quot;69fa9f773fcdd&quot;}\" data-wp-interactive=\"core\/image\" data-wp-key=\"69fa9f773fcdd\" class=\"wp-block-image size-full pin-image wp-lightbox-container\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"680\" data-wp-class--hide=\"state.isContentHidden\" data-wp-class--show=\"state.isContentVisible\" data-wp-init=\"callbacks.setButtonStyles\" data-wp-on--click=\"actions.showLightbox\" data-wp-on--load=\"callbacks.setButtonStyles\" data-wp-on-window--resize=\"callbacks.setButtonStyles\" src=\"https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-definition.png\" alt=\"A definition of the term &quot;broadbanding.&quot;\" class=\"wp-image-243966\" srcset=\"https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-definition.png 1024w, https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-definition-300x199.png 300w, https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-definition-768x510.png 768w, https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-definition-510x339.png 510w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><button\n\t\t\tclass=\"lightbox-trigger\"\n\t\t\ttype=\"button\"\n\t\t\taria-haspopup=\"dialog\"\n\t\t\taria-label=\"Enlarge\"\n\t\t\tdata-wp-init=\"callbacks.initTriggerButton\"\n\t\t\tdata-wp-on--click=\"actions.showLightbox\"\n\t\t\tdata-wp-style--right=\"state.imageButtonRight\"\n\t\t\tdata-wp-style--top=\"state.imageButtonTop\"\n\t\t>\n\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"12\" height=\"12\" fill=\"none\" viewBox=\"0 0 12 12\">\n\t\t\t\t<path fill=\"#fff\" d=\"M2 0a2 2 0 0 0-2 2v2h1.5V2a.5.5 0 0 1 .5-.5h2V0H2Zm2 10.5H2a.5.5 0 0 1-.5-.5V8H0v2a2 2 0 0 0 2 2h2v-1.5ZM8 12v-1.5h2a.5.5 0 0 0 .5-.5V8H12v2a2 2 0 0 1-2 2H8Zm2-12a2 2 0 0 1 2 2v2h-1.5V2a.5.5 0 0 0-.5-.5H8V0h2Z\" \/>\n\t\t\t<\/svg>\n\t\t<\/button><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-objectives-of-broadbanding\">What are the objectives of broadbanding?<\/h2>\n\n\n\n<p>HR, along with <a href=\"https:\/\/www.aihr.com\/blog\/compensation-and-benefits\/\">compensation and benefits<\/a> teams, implement broadbanding with the following objectives in mind:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Offering flexibility in employee compensation<\/li>\n\n\n\n<li>Encouraging employees to acquire new skills to move higher within the pay range<\/li>\n\n\n\n<li>Reducing the need for pay band reclassification.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Who uses broadbanding?<\/h2>\n\n\n\n<p>Broadbanding is more common in industries where employees tend to stay within the same companies and expand on their skills and training to move up within the same band. In other words, broadbanding makes it easier to reward employees for horizontal career growth.<\/p>\n\n\n\n<p>Broadbanding can work well for the following types of organizations:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Healthcare and hospitals<\/li>\n\n\n\n<li>Startups<\/li>\n\n\n\n<li>IT<\/li>\n<\/ul>\n\n\n\n<p>On the other hand, highly <a href=\"https:\/\/www.aihr.com\/blog\/hierarchy-culture\/\">hierarchical organizations<\/a> require different pay structures, as broadbanding de-emphasizes hierarchy. This type of pay structure might also be unsuitable for scaling companies, as it is not easy to replicate across different locations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-traditional-salary-structure-vs-broadbanding\">Traditional salary structure vs. broadbanding<\/h2>\n\n\n\n<p>Here&#8217;s a breakdown of the traditional salary structure versus broadbanding:<\/p>\n\n\n<div class=\"gutenberg-table-holder\">\n                                                                   <style>\n                                       .gutenberg-table-item-content-single::after {\n                                             background-color: #b0e7ff;\n                                        }\n                                  <\/style>\n                                                                    <div class=\"gutenberg-table-inner\">\n                                                           \t                         <div class=\"gutenberg-table-item\">\n                                                                                                             <div class=\"gutenberg-table-item-header\" style=\"background-color:#b0e7ff\">\n                                                                                                                           <div class=\"gutenberg-table-item-header-single\" style=\"width:20%\">\n                                                                                                                                          <\/div>\n                                                                                                                                                                                        <div class=\"gutenberg-table-item-header-single\" style=\"width:40%\">\n                                                                     Traditional salary structure\t                                                                <\/div>\n                                                                                                                                                                                        <div class=\"gutenberg-table-item-header-single\" style=\"width:40%\">\n                                                                     Broadbanding                                                                <\/div>\n                                                                                                                    <\/div>\n                                                                                                                                                                             <div class=\"gutenberg-table-item-content   have-header-table\">\n                                                                                                                                                                    <div class=\"gutenberg-table-item-content-item\" style=\"border-color:#b0e7ff\">\n                                                                                                                                                                                            <div class=\"gutenberg-table-item-content-single\" style=\"width:20%; border-color:#b0e7ff\"   header-item=\"     \" >\n                                                                                                    <p><strong>Number of pay grades<\/strong><\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%; border-color:#b0e7ff\"   header-item=\"Traditional salary structure\t\" >\n                                                                                                    <p>Many narrow pay grades for specific roles<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%\"   header-item=\"Broadbanding\" >\n                                                                                                    <p>Fewer, wider pay bands covering multiple roles<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                    <\/div>\n                                                                                                                                                                            <div class=\"gutenberg-table-item-content-item\" style=\"border-color:#b0e7ff\">\n                                                                                                                                                                                            <div class=\"gutenberg-table-item-content-single\" style=\"width:20%; border-color:#b0e7ff\"   header-item=\"     \" >\n                                                                                                    <p><strong>Flexibility<\/strong><\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%; border-color:#b0e7ff\"   header-item=\"Traditional salary structure\t\" >\n                                                                                                    <p>Less flexible, tied to job titles and promotions<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%\"   header-item=\"Broadbanding\" >\n                                                                                                    <p>More flexible, allows pay adjustments without title changes<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                    <\/div>\n                                                                                                                                                                            <div class=\"gutenberg-table-item-content-item\" style=\"border-color:#b0e7ff\">\n                                                                                                                                                                                            <div class=\"gutenberg-table-item-content-single\" style=\"width:20%; border-color:#b0e7ff\"   header-item=\"     \" >\n                                                                                                    <p><strong>Career progression<\/strong><\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%; border-color:#b0e7ff\"   header-item=\"Traditional salary structure\t\" >\n                                                                                                    <p>Relies on promotions for salary increases<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%\"   header-item=\"Broadbanding\" >\n                                                                                                    <p>Encourages lateral movement and skill development<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                    <\/div>\n                                                                                                                                                                            <div class=\"gutenberg-table-item-content-item\" style=\"border-color:#b0e7ff\">\n                                                                                                                                                                                            <div class=\"gutenberg-table-item-content-single\" style=\"width:20%; border-color:#b0e7ff\"   header-item=\"     \" >\n                                                                                                    <p><strong>Salary range width<\/strong><\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%; border-color:#b0e7ff\"   header-item=\"Traditional salary structure\t\" >\n                                                                                                    <p>Narrow salary ranges for each grade<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%\"   header-item=\"Broadbanding\" >\n                                                                                                    <p>Wide salary bands with greater pay variation<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                    <\/div>\n                                                                                                                                                                            <div class=\"gutenberg-table-item-content-item\" style=\"border-color:#b0e7ff\">\n                                                                                                                                                                                            <div class=\"gutenberg-table-item-content-single\" style=\"width:20%; border-color:#b0e7ff\"   header-item=\"     \" >\n                                                                                                    <p><strong>Managerial discretion<\/strong><\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%; border-color:#b0e7ff\"   header-item=\"Traditional salary structure\t\" >\n                                                                                                    <p>Limited discretion in adjusting pay<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                                                                                                                        <div class=\"gutenberg-table-item-content-single\" style=\"width:40%\"   header-item=\"Broadbanding\" >\n                                                                                                    <p>More discretion to adjust pay based on performance or market conditions<\/p>\n                                                                                                <\/div>\n                                                                                                                                                                                    <\/div>\n                                                                                    \t\t                                                               <\/div>\n                                                                                                  <\/div>\n                                         \t\t                           <\/div>\n                          <\/div>\n\n\n\n\n<figure class=\"wp-block-image size-full is-resized pin-image\"><a href=\"https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding.png\" target=\"_blank\" rel=\"noreferrer noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"680\" src=\"https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding.png\" alt=\"Traditional salary structure vs. broadbanding.\" class=\"wp-image-126590\" style=\"width:980px;height:auto\" srcset=\"https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding.png 1024w, https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-300x199.png 300w, https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-768x510.png 768w, https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-510x339.png 510w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-an-example-of-broadbanding\">An example of broadbanding<\/h2>\n\n\n\n<p>Let\u2019s say a company has a traditional salary structure with several levels of administrative positions, such as Administrative Assistant I, Administrative Assistant II, and Administrative Assistant III. Each position has a narrow annual salary range; for example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Administrative Assistant I<\/strong>: $35,000 &#8211; $40,000<\/li>\n\n\n\n<li><strong>Administrative Assistant II<\/strong>: $40,000 &#8211; $45,000<\/li>\n\n\n\n<li><strong>Administrative Assistant III<\/strong>: $45,000 &#8211; $50,000<\/li>\n<\/ul>\n\n\n\n<p>In a broadbanding system, these three roles would be grouped into a single, broader salary band. For instance, the company might create an &#8220;Administrative Support&#8221; band with a salary range of $35,000 &#8211; $50,000.<\/p>\n\n\n\n<p>Within this broader band, employees could earn raises based on skills, performance, or market conditions, without necessarily needing a promotion to a new title. This allows for greater flexibility in managing compensation, as employees could advance within the same band without the need for a formal title change or reclassification.<\/p>\n\n\n\n<p>For example, an Administrative Assistant I who gains experience and takes on additional responsibilities might see their salary increase within the band, even if their title remains the same. This helps retain talent and motivate growth without requiring constant promotions.<\/p>\n\n\n<div class=\"gaihrpl gaihrpl-29\"><div class=\"gaihrpl-single aaihrpl-146\"><a class=\"gofollow\" data-track=\"MTQ2LDI5LDYwMA==\" href=\"https:\/\/www.aihr.com\/courses\/compensation-benefits-certification\/?il_id=banner&#038;il_name=cbcp&#038;il_creative=cbcp-value&#038;il_position=slot2\" target=\"_blank\" rel=\"nofollow\" style=\"display:block;padding-top:20px;\"><img decoding=\"async\" src=\"https:\/\/www.aihr.com\/wp-content\/plugs\/podcast-blog-ads-fade.jpg\" srcset=\"https:\/\/www.aihr.com\/wp-content\/uploads\/CBCP-Banner-Value.png 360w, https:\/\/www.aihr.com\/wp-content\/uploads\/CBCP-Banner-Value.png 360w, https:\/\/www.aihr.com\/wp-content\/uploads\/CBCP-Banner-Value.png 700w, https:\/\/www.aihr.com\/wp-content\/plugs\/ w\" sizes=\"(max-width: 480px) 360px, (max-width: 960px) 360px, (max-width: 1280px) 700px, 750px\" style=\"box-shadow: 0px 0px 20px 5px rgb(46 61 73 \/ 15%);display: block;margin: auto; border-radius:19px;\" class=\"small_ad\" \/><\/a>\r\n<br><\/div><\/div>\n\n\n<h2 class=\"wp-block-heading\" id=\"h-advantages-and-disadvantages-of-broadbanding\">Advantages and disadvantages of broadbanding<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-advantages\">The advantages<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It encourages <a href=\"https:\/\/www.aihr.com\/blog\/internal-mobility\/\">internal mobility<\/a> and lateral moves within the organization. Being likely to stay in a specific pay band for longer can push employees to take on new projects, learn new skills, and take on stretch tasks to receive a pay increase.&nbsp;Focusing on competencies and skills rather than on job titles also promotes continuous <a href=\"https:\/\/www.aihr.com\/blog\/learning-and-development\/\">learning and development<\/a>.<\/li>\n\n\n\n<li>It streamlines organizational hierarchy by reducing the number of levels in a company and creating space for lateral moves and horizontal career growth.<\/li>\n\n\n\n<li>It increases employee satisfaction, especially for deep specialists. As such, they don&#8217;t need a promotion to advance in their careers and can achieve pay progression without having to become managers.<\/li>\n\n\n\n<li>It&#8217;s easier to administer. It is flexible and improves managers&#8217; ability to reward their employees without needing to promote them to provide more financial incentives continuously.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-disadvantages\">The disadvantages<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It does not always account for external salary benchmarks and changes in external market conditions.<\/li>\n\n\n\n<li>It reduces promotion opportunities. Broadbanding might contradict the work culture in some countries, where employees tend to expect promotions more frequently than in other countries. Fewer promotion opportunities may also cause employees to lose motivation.<\/li>\n\n\n\n<li>It can create (the perception of) pay inequity among employees. If you don&#8217;t set clear rules for rewarding similar work equally, broadbanding can result in pay differences that are difficult to justify.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-move-from-traditional-salary-ranges-to-broadbanding\">How to move from traditional salary ranges to broadbanding<\/h2>\n\n\n\n<p>Here are the key elements you need to successfully implement broadbanding in your organization:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Review your current compensation structure<\/strong>: Evaluate your company&#8217;s existing pay policies and strategies to determine how to transition to a broadbanding pay structure.<\/li>\n\n\n\n<li><strong>Make sure your <a href=\"https:\/\/www.aihr.com\/blog\/job-evaluation\/\">job evaluation<\/a> system is credible<\/strong>: This should happen before you implement broadbanding to ensure fair and accurate job classification into bands.\u00a0<\/li>\n\n\n\n<li><strong>Put jobs of equal value in one band<\/strong>: This ensures consistency and fairness. External auditors also regularly verify bands, so documenting them clearly is important.<\/li>\n\n\n\n<li><strong>Involve all relevant stakeholders<\/strong>: The compensation and benefits team should involve HR, management, and even employees when developing the bands. Communication is key, and explaining a broadband structure is easier when more people are involved in its creation.<\/li>\n\n\n\n<li><strong>Develop clear policies around your broadbanding structure: <\/strong>This policy should include information on how employees can earn a raise within their pay band, how moving from one broadband to another works, etc.<\/li>\n<\/ol>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<h3 class=\"wp-block-heading\">Broadbanding in HR: What to keep in mind<\/h3>\n\n\n\n<p>Explain the broadbanding pay structure in the selection and interview process to help you manage employee expectations about pay increases and career growth within your organization from the very beginning of the <a href=\"https:\/\/www.aihr.com\/blog\/employee-life-cycle\/\">employee life cycle<\/a>.<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faq\">FAQ<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1729773092878\"><strong class=\"schema-faq-question\">What is the meaning of broadbanding?<\/strong> <p class=\"schema-faq-answer\">Broadbanding is a compensation strategy that consolidates multiple pay grades into fewer, wider salary bands. This allows for more flexibility in employee pay, making it easier to reward skills, experience, and performance without needing frequent promotions. It\u2019s commonly used to support career development and simplify the structure of pay grades.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1729773134253\"><strong class=\"schema-faq-question\">What is an example of broadbanding?<\/strong> <p class=\"schema-faq-answer\">An example of broadbanding would be a company with traditional pay grades for junior, mid-level, and senior roles combining those into a single, broader salary band. For instance, instead of having separate pay ranges for an entry-level marketing associate, a marketing manager, and a senior marketing manager, the company could use one wide band to cover all three roles. This gives employees more room to grow within the band without needing a formal title change.<\/p> <\/div> <\/div>\n","protected":false},"parent":0,"menu_order":0,"template":"","hr_glossary_category":[575],"class_list":["post-126587","hr-glossary","type-hr-glossary","status-publish","hentry","hr_glossary_category-compensation-benefits","description-off"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.4 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What Is Broadbanding? Definition + Example | HR Glossary - AIHR<\/title>\n<meta name=\"description\" content=\"Broadbanding, in contrast with a traditional pay structure, consolidates a range of similar job classifications into one wide pay band.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aihr.com\/hr-glossary\/broadbanding\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Broadbanding\" \/>\n<meta property=\"og:description\" content=\"Broadbanding, in contrast with a traditional pay structure, consolidates a range of similar job classifications into one wide pay band.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.aihr.com\/wp-json\/wp\/v2\/hr-glossary\/126587\" \/>\n<meta property=\"og:site_name\" content=\"AIHR\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/analyticsinhr\/\" \/>\n<meta property=\"article:modified_time\" content=\"2024-10-29T10:21:08+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.aihr.com\/wp-content\/uploads\/broadbanding-definition.png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@AnalyticsinHR\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\\\/\\\/www.aihr.com\\\/hr-glossary\\\/broadbanding\\\/\",\"url\":\"https:\\\/\\\/www.aihr.com\\\/hr-glossary\\\/broadbanding\\\/\",\"name\":\"What Is Broadbanding? 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