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Difference between Traditional Pay structure and Broad banding.

 

In this article we will discuss about Difference between Traditional pay structure and Broad banding.

Broad banding is a process of combination of number of related job into single pay band. Earlier there was a traditional pay structure which contained number of salary structure and was difficult to maintain for organizations. But now,broad banding  consolidate number of salary grades into fewer bands. This structure divide number of pay band into small bands.

In Broad banding, pay ranges are spread wide but there is less overlapping on the other pay ranges. Broad banding evolved because organization wants flatten hierarchies which lacks promotional opportunities. So, Broad banding helps to increase in pay without promotion which means it provides non-promotional opportunities for employees

 

Difference between Traditional Pay structure and Broad banding.

 

Basis Traditional Pay structure Broad Banding
1.Number of Pay scale Larger   Smaller
2.Salary grades    Larger   Smaller
3.Emphasis/Consider It consider internal and external equity It consider only internal culture and help employees to understand the organization.
4.Overlapping Higher on other pay ranges It reduces overlapping on other pay ranges
5.Hierarchy It has larger hierarchy which create delay in communicating the message. It reduces hierarchy and make communication easier.
6.Promotional opportunities It has more promotional opportunities. It reduces promotional opportunities.
7.Midpoint progression 5% to 10% No midpoint
8.Range spreads 20% to 40% 80% to 200%
9.Compa-ratio-tool Used Cant be used
10.Comparison with competitors pay   Done   Not done

So here we discuss Difference between Traditional pay structure and Broad banding. For any query comment below.

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