The Complete Guide to Using a Broadband Salary Structure

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The broad swathe of compensation structures can provide organizations with a more flexible approach to managing employees and compensation. Find out in this guide which companies are best suited for broadband pay levels.

There are different ways your company can manage salary structures when planning your workforce. While many traditional companies have a very detailed organizational hierarchy, and each with its own corresponding pay scale, new methods are being used to shrink organizational charts and expand pay scales.

Broadband is quickly becoming a popular way for companies to increase internal professional rivalry and encourage employees to develop and grow within an organization. Although this unique compensation structure has many advantages, it is not ideal for all organizations.

This guide will help you understand what a broadband compensation structure is, when to use it, and when it might not be right for your team. We’ll also look at some pros and cons of this compensation structure and offer some best practices to help you get started.

What is Broadband in Human Resource Management?

Broadband in terms of HR refers to a salary structure with wide salary ranges within each pay grade. Traditional pay structures have many different job levels or bands, with a difference of about 40% between the lowest and highest points of each job level. To significantly increase an employee’s salary in a traditional model, he would have to jump a few levels.

With a wide band pay scale, there are fewer job bands with a much wider pay range between the low and high points of each level. With this approach, employees typically stay in a band longer and there can be up to 80% difference in pay levels within a band.

Benefits of Broadband

Now let’s look at some specific benefits that a broadband compensation structure can offer your business.

1. Increased focus on career development

Since the broadband pay structure offers such a large gap between the minimum wage and the maximum wage, employees will stay in a specific job band for a longer period of time. During this time, employees are encouraged to be curious about job development, push themselves to tackle new projects, and learn new skills to receive pay raises.

Unlike traditional models where employees have little room to improve in a specific job level, broadband offers a much more flexible approach, allowing employees to explore new areas of growth that will benefit their team.

2. Simplified organizational structure

Traditional work models can have complex organizational structures. Broadband allows you to significantly reduce the number of working levels within your organization and provides more room for lateral travel. Broadband structure levels are broader, allowing you to set a loose structure around expectations, but really tailor a particular job to an individual’s strengths.

3. Happier employees

Broadband can help attract top talent and improve your employees’ satisfaction with their jobs and the company in general. Some employees never want to become managers, but they still want to continue learning and growing while receiving better compensation for their newly acquired talents. Broadband is a great way to retain the best of the best and allow for expansion without forcing structural promotions.

4. Less demand for specific job skills

Another advantage of broadband is that since job levels are so flexible and accommodating, there is no need to search for employees with the exact same job skills. You might have employees within the same job class at the same pay rate who have varied skills that combine to make the company stronger and more competitive. This opens your doors to attracting talent that doesn’t necessarily fit a hyper-defined role.

Disadvantages of Broadband

On the other hand, broadband has some disadvantages that are worth considering before adopting this method.

1. Not always scalable

If you’re the owner of a large company that employs hundreds or thousands of employees, a flexible broadband compensation structure might not make the most sense. It can be difficult to scale and replicate a broadband payment system that has worked well in one department and in many different departments.

A more traditional model could simplify recruiting new talent and ensure that all the skills you need to keep the business running smoothly are in-house. It can also be difficult to manage payroll for so many different pay rates, depending on the size of your HR department and your specific HR software.

2. Difficult to measure internal success

Broadband compensation structures encourage employees to grow, but the new skills and projects they tackle may not be in the best interest of the company. Although guardrails can be put in place to promote professional development that matches the expectations of a specific job group, it can be difficult to measure an employee’s effectiveness when everyone does their job differently.

This may not be a barrier for small businesses or those using the Decision Band Method (DBM), but it can be a huge challenge for larger businesses.

3. Wide salary ranges can be confusing

In traditional salary structures, there are well-defined midpoints. Although broadband structures can also have midpoints, they are more likely to have midranges. It can therefore be difficult to determine the amount of raise each employee should receive, especially if you are unable to successfully measure how an employee’s growth will benefit the company financially.

Who should use broadband?

While broadband compensation structures have become more popular for a variety of reasons, traditional compensation models still have a place in some business structures. It’s important to know if broadband compensation structures will be an asset to your team before you commit to making this change.

When broadband makes sense

Let’s look at a few types of companies that could benefit from a broadband compensation structure:

  • Startups: When building a startup, you often need people with particular expertise but who can wear many hats. Defining these roles can be difficult to do in terms of traditional job groups. With broadband compensation structures, you have the customization and flexibility you need to hire top talent at different compensation levels that may fall within the same broad bands.
  • Creative Agencies: A marketing or advertising agency typically needs creatives from a variety of backgrounds to grow and expand their audience base. While these areas can be defined (writers, designers, developers, project managers), not all individuals or teams will need the same exact skills. For example, you might have a web project team with two copywriters, one who excels at creating impactful headlines and organizing sitemaps and the other who is good at producing copy and grabbing attention. of a client during meetings. These variables work well in creative environments and can lead to lateral moves to new teams and salary increases that don’t necessarily move individuals into leadership or director positions.
  • Lean companies: Companies with a small number of employees generally require employees to continually learn and develop new job skills. Broadband allows you to encourage employees to look beyond traditional job roles and is ideal for light businesses that need employees who are always up for a challenge.

Who should try a different compensation structure

As mentioned earlier, broadband won’t work for every business. Here are three types of companies that might want to explore alternative compensation structures:

  • Large companies : Broadband can be difficult to scale and can lead to issues with pay gaps, role definitions and hiring practices for larger companies. If you also hire salaried and hourly workers, broadband will likely add confusion to your salary structure.
  • Hierarchical companies: Regardless of size, if your business needs hierarchy to thrive, a broadband model probably won’t work well for you.
  • Companies looking to scale: Even if your team is small now, if you’re looking to scale and add offices across the country or the world, you’ll likely appreciate a more structured and easily replicable compensation structure.

3 Best Practices When Using a Broadband Compensation Structure

If you decide to use a broadband structure in your business, here are some general recommendations to make this pay scale as effective as possible.

1. Establish employee growth plans

Since it can be difficult to track employee performance in this model, it is important to establish individual growth plans based on employee interests, desire to grow, and current job performance. This will be useful in determining future salary increases and lateral moves.

2. Clearly define management structures

While broadband generally works well for teams with flat structures, ultimately your employees will need some type of manager, team leader, or supervisor to turn to. Make sure they know who this person is and make sure they have regular access to management.

3. Explain your pay brackets during job interviews

Some employees prefer to work for companies that offer frequent promotion opportunities, even if it limits their professional growth. Be sure to clearly explain how your company handles growth and salary increases before hiring a new team member.

Broadband provides more flexibility for many streamlined businesses

The paid broadband concept offers interesting opportunities for both companies and employees. If your company doesn’t fit the traditional hierarchical work model, adapting this compensation model can help you attract the right talent for your business needs.

William M. Mayer