Original concept of broadbanding fatally flawed

BROADBANDING

Original concept of broadbanding fatally flawed

Many organisations have jumped on the broadbanding bandwagon "without fully appreciating what they are getting into", claims e-reward.co.uk's Michael Armstrong, writing in the latest issue of IDS Executive Compensation Review.

The original concept of broad bands was that they should be unstructured, allowing scope for career progression and rewarding increases in contribution and competence through the whole width of the band. But as Armstrong points out, in practice most organisations have balked at so much flexibility and introduced some form of control within bands. More and more structure -- everything from reference points to zones and segments -- has been introduced.

Says Armstrong: "The original concept of unstructured broad bands did not last long. It created expectations about the scope for progression which could not be met. Progression had to stop somewhere if costs were going to be controlled, and no rationale was available for deciding when and why to stop. Line managers felt adrift without adequate guidance and staff missed the structure they are used to. For this reason, questions started to be raised about the value of broad bands, especially when in effect all they consisted of was spot rates determined mainly be market relativities."

Use of job evaluation

One of the issues associated with broadbanding is the use of job evaluation as a means of defining bands. Initially, it was thought that broad bands would mean the end of analytical job evaluation as we know it. But broadbanding cannot eliminate the need for procedures to value jobs which still have to be allocated into the right bands and into appropriate positions in those. And internal equity and equal value considerations must not be ignored. As Armstrong points out, job evaluation has, in fact, become progressively more prominent to define the broad band structure and meet equal pay requirements.

Equal pay problems

Apart from these fundamental flaws, Armstrong reckons there are also a number of other drawbacks to broadbanding. One of his major objections is that it can create equal pay problems:

• "its reliance on market rates, for example, can simply reproduce existing labour market inequalities"
• "the inclusion of jobs of widely differing values or sizes in the same broad pay range may result in gender discrimination"
• "women may be assimilated at their present rates in the lower regions of bands and find it impossible, or very difficult, to catch up with their male colleagues."

Want to know more?

Title: "What's happening to broadbanding?", by Michael Armstrong, IDS Executive Compensation Review 280, June 2004, Incomes Data Services.

Availability: Contact customer services at IDS in London, tel: 020 7324 2599, or email: sales@incomesdata.co.uk.

For more information about the monthly IDS Executive Compensation Review (formerly IDS Management Review) visit www.incomesdata.co.uk/mpr/mpr.htm

To request a complimentary copy of the latest issue of ECR visit www.incomesdata.co.uk/forms/free_ecr.htm

Incomes Data Services is an independent research organisation providing information and analysis on pay and conditions, pensions, employment law and personnel policy and practice in the UK and the rest of Europe. Find out more at www.incomesdata.co.uk

Posted 21 June 2004