PAY STRUCTURES
Broadbanding is "another faddish fashion"
At the moment, there seem to be books and articles all over the place expounding the virtues of broadbanding. But according to a new piece of HR literature, broadbanding is nothing more than a passing fad. The book's conclusion is unambiguous: "This is an administrative nightmare worse than that of any grading system."
A catalogue of costly "broadbanding myths" is laid out for inspection by the author Brian Dive in a 20-page chapter entitled "Broadbanding: fool's gold". His contention is that much of the underlying thinking with regard to broadbanding is based on little more than hot air and hype. Setting his sights on the ghastly basic mistakes managers make when they fail to question underlying beliefs, his attack on the "fad" of broadbanding will find favour with many sceptics.
In The Healthy Organisation: A revolutionary approach to people and management Dive, who is currently director of the consulting firm DMA International and has extensive international experience in HR at Unilever, concludes: "The fundamental flaw in the argument for broadbanding of money is the complete absence of a conceptual model to identify both the appropriate number of bands and the width of those bands."
Six myths about broadbanding
Dive attempts to do compensation professionals a service by challenging received wisdom about broadbanding. Under his microscope are six particularly costly myths about broadbanding. "Although the six reasons initially given for advocating a move to broadbanding look plausible, experience to date suggests they are illusory," says Dive.
1. Broadbanding reduces burdensome administration because fewer grades mean less work on job evaluation, administrative changes to salaries and benefits.
"To replace a creaking system of outmoded logic with one of no convincing logic is not a recipe for success," argues Dive. He can find no evidence that shows broadbanding is easier and simpler to manage, nor can he uncover any signs of cost savings.
2. Dismantling an overly structured and bureaucratic approach of too many grades affords greater flexibility.
The broadbanding systems Dive has encountered have "no objective basis or robust paradigm as a bulwark against lack of management competence or old-fashioned favouritism". Costs can spiral out of control, he argues, "which is not the flexibility that most people have in mind when they advocate broadbanding".
3. Broadbanding enables more emphasis on lateral career development.
For the author, these claims are amongst the "flimsiest". While broadbanding may be a step in the right direction, the "lack of a robust and unequivocal framework suggests that the new state might merely be an alleviation of the former, not a solution."
4. Broadbanding supports culture change initiatives and complements a flatter organisation culture.
Dive reckons there is scant evidence that broad pay bands have had a noticeable and measurable positive impact upon culture. "The claim that broadbanding drives culture change is spurious," he concludes.
5. Broadbanding facilitates external (customer) focus as opposed to internal focus.
Again Dive can find little convincing evidence to support these claims. "At best it seems to be neutral, neither helping nor hindering focus on external constituencies."
6. Broadbanding promises a closer link to competencies.
The assessment of competencies is apt to be all too subjective, argues Dive. "If the foundation of competencies-linked pay is built on definitional sand it is hard to see how an effective broadbanding pay system can be constructed as a consequence. Pay for the person, not the job, always looks attractive, but in practice both are needed."
A final word
"The key point, though, is that the emergence of the broadbanding of money is not the solution to today's flatter organisation structure. It is not a reward strategy in tune with the real world or the aspiration of young executives. Societal trends are moving in precisely the opposite direction." - Brian Dive.
| What is "decision making accountability"? |
| The Healthy Organisation: A revolutionary approach to people and management demonstrates how to build a "healthy" organisation based on principles which have been tried and tested internationally by the author. These principles are based on "decision making accountability" (DMA), a new approach covering all aspects of people management. DMA focuses on decision-making quality rather than quantity and seeks to enable managers to assess the value that each job brings to the organisation. The book also describes how this concept has been successfully applied to Unilever and more recently to Tesco. At Unilever, author Brian Dive replaced the existing management systems for 20,000 managers in 100 countries. |
| Decision making accountability establishes:
|
| Web site: www.dmainternational.com |
Want to know more?
Title: The Healthy Organisation: A revolutionary approach to people and management, by Brian Dive, 278 pp.
Availability: Published by Kogan Page, the book is available from all good book shops or direct from the publisher, tel: 01903 828800, email: orders@lbsltd.co.uk or order online at www.kogan-page.co.uk.