Broad banding or narrow banding

Broad banding or narrow banding

A new reader asks : “One of our major priorities for HR this year is to review current pay and compare it with market pay levels. To do this, we need to analyze and come out with recommendations.

Part of the challenge is whether to recommend narrow banding so our people feel their careers progressing quickly or broad banding.

Thank you in advance for your cooperation.”

Let me take a stand on this issue and quickly come to the heart of the matter : from a practical point of view, I don’t really like broad banding and would rarely recommend it except in some very special cases.

First let’s define broad banding so as to avoid any confusion. In this system, all the jobs in the company are typically grouped in 5 to 7 “bands” instead of the traditional, narrow grades that are found in most companies. These bands that define grades are accompanies by salary ranges that are just as wide and there is usually no notion of midpoint as it would not make sense in such an open context.

Companies that implement broad banding usually do so in order to reflect the flatter hierarchies that exist in some organisations today. They want to reflect the fact that jobs are more fluid nowadays, and that progression in the company is based on the acquisition of skills rather than traditional promotions tied to performance.

In broad banding, the emphasis is on development through lateral moves and the acquisition of competencies rather than vertical progression in the hierarchy.

This approach works well in young organisations such as startups for example, where roles evolve constantly and employees acquire new skills and responsibilities as needed and often in a very informal manner that is aligned with the company culture.

It’s also possible to introduce a meaningful broad banding approach if your company is focusing a lot on competencies, with a strong model of career development related to the acquisition, demonstration and measurement of skills.

There is however a number of drawbacks that need to be taken into account if you want to implement broad banding. The 3 biggest ones are in my opinion:

  1. Broad banding requires a lot of compensation education in the organization, so that managers can have meaningful conversations with employees. Because the salary ranges are so wide, expectations from employees can go up as they may compare themselves to the “wrong” people in the same band. By shifting focus from the job to the individual, broad banding also normally requires more focus on pay for performance so as to recognize individual contributions in a meaningful way. This means that managers need a lot of education on giving feedback, discussing career and development opportunities, explaining how the employee pay has been determined.
  2. Because very few companies use broad banding, in parallel, some form of traditional job evaluation is still required in order to get a clear sense of market value for the position. Otherwise you will not be able to establish if how you pay is appropriate compared to your compensation philosophy. To give some sense of relevant market pay, many of the companies that introduced broad banding also create “pay zones” for job families within the wide salary range, in effect recreating a more traditional approach to pay within the allure of a newer, trendy method to managing pay. This means more work for the HR and Compensation team as you will still have to perform classic job evaluations in order to establish your market ranges, and you will also need to answer many more individual queries coming from employees, or from managers who are not able to provide meaningful explanations to the questions of their team members.
  3. With the wide salary structure, you create a situation where there is much less cost control built in the system compared to a traditional, narrow band approach. The risk of employee pay rising to the top of the structure is much bigger given there are fewer references to the market, no useful internal analysis through comparatios, and usually, more involvement in pay decisions from line managers (who may or may not be educated enough to make these decisions).

One final point which is quite important in the Middle East : the culture and importance of external social and family validation. Promotions are “seen” not only by the employee but reflect on the whole family and social circle. By reducing the number of promotions because there are so few grades, broad banding lessens the opportunity of social proof of the employee’s progress and internal recognition, and this may impact morale and motivation in Middle East companies.

So as you can see, in my opinion, broad banding is not necessarily an ideal approach except in some very specific. In my next post I will cover traditional / narrow bands and will make some suggestions.


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  1. I have had the opportunity to work in both structures and think this is a matter of choice with the key factor being how organizations are structured to succeed. When considering both alternatives i.e. Narrow or Broad banding, a bit of background needs to be brought into play as to how both systems came about. Early organizations were industrial concerns which had a lot of order givers and takers, therefore they were structured after the military and were hierarchical in nature. As with the military, “promotion” was the symbol of progression. While this worked well in say manufacturing (and still does), it is perhaps less appropriate for other industries where progression is through qualifications, knowledge and experience, not necessarily managerial responsibility. This is the case with several firms today especially technology firms, boutique investment banks, as well as professional organizations, etc. There are not enough hierarchical roles to create promotion opportunities so they work with broadly defined bands based on competency/proficiency levels and compensation is structured accordingly. So for me, the choice between either approach is based on how the organization is structured to succeed.

    To address the 3 points, I will look at them this way:
    1. Increased requirement for education – I think the core role of rewards is to communicate and therefore having to do more of it should not be a problem. The key is to be in a position to communicate simply and effectively. The communication around broadbanding is that of a journey – as you become more proficient at what you do, your pay increases. It helps to have a better conversation with that employee on a specialist track whose skills you value but who might not necessarily have the capacity to take on higher responsibility, that you can pay them their due without having to give a meaningless title.
    2. Job evaluations – these are typically done to evaluate the internal worth of the jobs. Once that is done, then a benchmark is done in the market place which is easier these days as most grading systems can be matched to each other. As stated earlier, the choice of broadbanding is a function of organization type and industry and therefore it should be possible to find other similar organizations that can be benchmarked against.
    3. Cost – I have always believed that the width of your pay range does not determine how much you pay or by how much you increase salaries, rather progression through the band is based on performance or longevity or both. The narrow bands can force you to spend more because when you hire a candidate whose current pay is difficult to fit into the range for the grade you want to hire into, sometimes the candidate gets bumped up a grade. While the salary cost remains the same as it would be in a broadband, benefit cost is higher as these are usually grade based. Having a broad band helps to manage that and overall cost is managed by the review rates granted on a periodic basis.

    Will this succeed in UAE? I really don’t know and perhaps defer to you here as I am new to the region. My experience in Africa which also has a similar power distance culture shows that the social effect of promotions on employees is true. However, things are changing and the key is education and showing employees that promotions based on longevity and subjective assessments can be less gratifying over the long term than those which drive development by providing new and bigger challenges. Why is such a message becoming successful? Its based on the the current pursuit of self determination by today’s generation…..they are no longer bound by old structures but allow themselves to define success in different ways. I think as more role models from such structures become widespread within the UAE (considering how young the country is), it might begin to take root here too.

    • Thanks Oluyomi for a very comprehensive comment. I agree with your points and also the fact that over time, culture will change in the UAE and GCC. In Dubai in particular, multinationals in the free zones sometimes have pure broad band. I believe however that more organisations use “fat banding”, which I will describe in the second part of the article in my next post.


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