Broadbanding

Headnote

Is That Your Company's Final Answer?

Regis Philbin, host of the popular quiz show "Who Wants to be a Millionaire?", may never ask his guests a question on how to effectively implement a broadband compensation program. But, if you are in the business of compensation, that is a million-dollar question.

Broadbanding is defined as a human resources strategy that consolidates a large number of relatively narrow grades into much fewer bands with wider salary ranges (Gilbert and Abosch 1996). Companies have taken two approaches to broadbanding:

Broad grades. Broad grades have relatively wide pay ranges and hold many of the traditional salary administration characteristics, such as midpoints and quartiles.

Career bands. Career bands tend to have extremely wide salary ranges, or no ranges at all, and tend to emphasize career planning and training more so than broad grades (Abosch and Hand 1998).

Broadbanding is not a new concept. Many companies incorporated banding in the early 1990s at the height of downsizing and, since then, the movement has not lost its luster. Most companies that operated with broadbands in the early 1990s continue to do so, and more companies are converting their grade systems into bands (Abosch and Hand 1998).

This article shares investigative data from 10 companies that recently and successfully converted from salary grade systems to broadbanding. (See "Survey Methods and Procedures.") Additionally, the results found in this small but qualitative study are compared to those found in a more elaborate 1998 study on broadbanding sponsored by WorldatWork. The intent is twofold: to provide helpful ideas to those considering a change in their compensation programs, and to educate those interested in learning more about broadbanding.

Specifically, the following questions are posed:

Why do companies implement broadbanding?

Who champions a successful program?

What issues are addressed during the conversion?

How is broadbanding communicated to employees?

How do companies evaluate a program?

What are the caveats to implementation?

What are the outcomes?

The Life Lines of a Successful Broadband Program

Several themes characterize how companies successfully implement broadband programs. Based on study results, a successful broadband program is

Championed by a team of high-ranking corporate officials.

Implemented for a combination of business and human resources needs.

Designed in such a way that the number...