BROAD BANDING
Selecting a Rewards Strategy Appropriate to Your Organizational Environment
What is Broad Banding?
‘Broad Banding’ is not a definitive term, but is often used with respect to an organisation’s historical practice.
One organisation’s ‘Broad Band’ may be another’s ‘administrative grade’.
While both approaches ‘band’ jobs using some form of work comparison, each is appropriate to a completely different environment.
Administrative Grades vs. Broad Bands
Grades:
Group jobs of the SAME ‘size’ – that is, where differences are barely perceptible.
Are generally consistent with organizational hierarchy.
Are typically employed to enhance administrative efficiency in large organisations.
Administrative Grades vs. Broad Bands (contd)
Broad Bands:
Group jobs of perceptibly DIFFERENT ‘size’.
Result in pay ranges larger than necessary for any one job in the band.
May result in reporting relationships within a band.
Focus on flexibility (but can still carry high administrative overheads).
Pressures Toward Broad Banding?
The changing nature of ‘modern’ organisations is widely described as being toward…
Flatter, less hierarchical structure
Generalized roles over specialized jobs
Flexibility over bureaucracy.
Broad Banding is a mechanism attuned to such changes, however, adoption on the basis of fashion or even cost cannot be justified.
Consider Hay’s conceptual model
of work culture…
Process
Network
Time-Based
Functional
Unified Responsiveness
Disciplined Reliability
Flexible Venturesomeness
Adaptive Opportunism
Impact of
Changes
‘Job Size’ can fluctuate through time…
While some growth is implicit in the traditional notion of a job, the concept of varying job size is difficult to accommodate in a hierarchical organisation.
Job Size
Time
The significance of this varies markedly…
Only minor variations in job content typically occur in a stable functional organisation, reflecting specialization.
Significant variations are common in process work cultures, where team based work practices are employed, or network cultures with a project focus.
Major variations occur routinely in time-based environments, reflecting both role growth and varying individual impact.
Conceptual Rationale for Broad Banding
Reflects growth in job size without promotion for individual contributors (eg technical specialists).
Encourages flexibility and diversity in deployment and development rather than specialisation.
Empowers line managers to make judgements appropriate to circumstance.
Facilitates a focus on career and capability development in both performance management and pay systems.
Pragmatic Rationale for Broad Banding
De-emphasises status and grading.
Reduces pressure for promotion and re-grading.
“Blurs the edges” around pay decisions, accommodating market and individual pay premia.
Development of Bands
Must reflect organisational reality or the goals of a participative change process.
This is a ‘values laden’ process with a high premium on communications and consistency.
May be appropriate to develop an interim structure to accommodate the pressures of change.
Sample Bands
Implications – Is This Your Culture?
Promotion is less frequent (and more important when it happens).
People have to be prepared to move for development, without necessarily receiving a promotion or a pay increase.
Communication of pay becomes less about ‘the range’ and seniority or entitlement and more about an individual’s salary and performance.
Implementation – Systems
Although typically transparent to employees, reference points and external relativity are still based on work comparison.
For example, such points may be based on:
Job size
Market rate
Competency/skill acquisition.
However, the measures employed must be robust for the banding model to succeed.
Implementation – Capability
Focus must shift from ‘passive’ system driven performance management to ‘active’ line management driven methods.
Empowered managers must also be personally equipped to manage performance and cost.
Policies, eg ‘progression rules’, must be changed (and often tightened).
Implementation – Risks
Where high quality systems are not developed, cost blow-outs are common.
$
$
Implementation – Performance Measurement
What
(performance
objectives)
How
(capabilities, competencies, skills)
Overall
Performance
Implementation – Administration (continued)
Band A
Zone 3
Zone 2
Zone 1
Position
Requirements
Personal
Performance
X
X
Likely
Pay
?
Intent of flexibility implies the use of ‘accountable guidelines’ as a reality check rather than ‘rigid rules’.
In Summary, Broad Banding…
Must reflect organisational reality in terms of structure, culture and values.
Will facilitate change but not drive it – typically failing where deployed in isolation.
Requires robust and credible supporting systems – it may cost more, not less, but resources are deployed more effectively in support of achieving strategy.
Broad Banding is in danger of being deployed as yet another ‘silver bullet’ in the ongoing quest to maximise the potential of human resources while reducing unnecessary overheads. In other words a way of getting something for nothing.
While my theme today seeks to provide you with a basic understanding of some of the issues to consider when contemplating a broad banding approach, two broader issues need to be emphasised.
The first of these is a reiteration of the observation that there are no magic, ‘one shot’ solutions to human resources issues. Unless part of an integrated approach, broad banding or any other significant initiative will have limited success at best.
Secondly, almost as a corollary to the first point, if a broad banding initiative is to succeed it will be as part of a broader strategy. The associated investments mean that potential should be considered in terms of performance gains rather than cost savings.
Broad Banding is term which tends to be used very loosely. To some ANY banding is broad banding. However, when you consider that some organisations which are large by any standard get by with a handful of bands whereas other comparatively small companies require several times as many, there are clearly conceptual distinctions to be made.
A distinction at the outset between Broad Bands and administrative grades is necessary in that the purpose and appropriate environment for each is markedly different.
While administrative grades MINIMISE distinctions between similar jobs, they MAXIMISE distinctions between clearly different jobs and reinforce organisational hierarchies.
Although they are easier to administer than individual job evaluations, they are intrinsically LESS flexible. Indeed, a key reason for implementing administrative grades is take pressure off evaluation and salary administration processes where key supporting systems are unable to prevent ‘creep’ in evaluations.
When dysfunctional, such structures can become an end in themselves as status, entitlements and promotion become their chief focus.
On the other hand, true broad bands serve to de-emphasise traditional notions of hierarchy.
The notion of tradition is important here because attention to broad banding is symptomatic of a perspective that affect most organisations to some extent – that traditional approaches may no longer be appropriate,
The nature of the forces of change on organisational structure is widely described and some of the key organisational imperatives which result are noted here, perhaps somewhat emotively.
Where such changes are important, Broad Banding can play a key part in assisting them. However, justification for a heavy commitment in this area is not straightforward. Questions must be raised as to the appropriateness of such an approach in PARTICULAR environments, and as to whether the level of investment required is justified.
Most of you have probably been exposed to Hay’s model of organisational work culture. By far the majority of organisations could traditionally be characterised as being in in the lower left hand quadrant of this model – the primary purpose of these FUNCTIONAL organisations being the ongoing reliable delivery of a core technology.
Most organisations would see the forces of change pushing them in the general direction of the arrow superimposed on the model. However, it is easy to overemphasise the impact of such changes. Clearly, some organisations BELONG in the functional quadrant and for these true broad banding would would be counter productive.
For those of you familiar with traditional techniques of job evaluation the notion of job size varying through time may be uncomfortable. However, on closer consideration this makes sense when you contrast a highly specialised and defined role in an organisational hierarchy and a flexible or multi-skilled role in a work team.
In terms of the earlier culture model, it can be seen that the extent to which this is significant can vary markedly. This serves to emphasise further the need for an integrated approach to banding.
If we understand the nature of organisations where broad banding is appropriate, some of the conceptual reasons for its adoption become more easily understood. There would no doubt be a number of organisations represented here which would see such concepts has having limited application in their own environments.
Similarly, but more pragmatically, broad banding can facilitate the change process by removing traditional obstacles.
It is apparent then that the development of an appropriate banding model is a process that is specific to a particular organisation and is yet another situation where an off the shelf solution is destined for failure.
It should be apparent to employees where their job fits in.
This example makes provision for a dual career ladder to accommodate technical specialists. Such an approach may have meaning in one organisation and not in another. The language employed and the distinctions made must be credible.
When considering the implications of such an approach, these are among the key criteria you should meet. If you are uncomfortable with them then reconsider.
Having decided to proceed, the practical considerations in putting the foundations in place must be considered.
Not just the systems themselves but the capabilities of those employing them become critical.
The consequences of shortcuts taken in implementation and administration quickly become apparent. Whether moving from a system of administrative grades as above, or from some other system, this is a typical consequence.
Performance management in a broad banded organisation typically embodies a much greater emphasis on HOW work is done. Great care must be taken however on linking input based measures to key outputs if the same problems as depicted previously are not to occur, together with a FALL in productivity.
Pay decisions will typically involve higher levels of line management judgement than traditional mechanical systems. In such cases an ‘empowered’ line manager will need to be better trained, supported by more sophisticated appraisal processes and subjected to a credible review.
In concluding, I return to my initial themes…
One more point should also be made. The essence of traditional systems in this area was initially at least based on a need for credibility, proper controls and consistency in order to dispel any any appearance of arbitrariness. Without these features, successful implementation of broad banding is unlikely.
