A broad banded pay structure groups a combination of job classifications into pay bands and places a larger spread between bottom and top rates of pay. Together with the greater pay range within each band and the smaller number of bands, broad banding is quite distinct from conventional grading systems. Pay progression through each band is normally related to competency based, performance, contribution or market rates of pay.

when should broad banding be introduced?

Broad banding is often introduced as a means of enabling an authority to redesign and re-modernise its salary structure.

It can be introduced in stages rather than across the whole organisation. There are two main reasons for doing this:

• to address severe recruitment and retention difficulties in certain parts of an organisation. It is more appropriate here to limit the changes to the job areas that are experiencing the greatest labour market pressures. In such circumstances, a common approach is to combine related classifications into a job family
• to move employees to multi-functional teams where the scope of broad banding will be more extensive and the structure more complex. If a team is organised to either complete a related set of tasks or all related activities in the delivery of a service, the bands may have to accommodate its unrelated classifications. One approach is to link progression to a competency based pay structure where employees are rewarded for the acquisition of new skills (competencies). Each recognised competency attained can be used as the basis for moving an employee onto the next spinal column point.

the width of pay bands

Broad banding allows authorities the freedom to design bands that meet their specific requirements. When aligned to job families this approach can be tailored to meet the needs of individual service delivery areas. A fundamental consideration is to decide on the spread between the lowest spinal column point in the band, and the highest. The range of pay within bands could involve maximums that are 30% to 50% higher than the minimum rates. Some private sector organisations have often opted for wider bands, in some cases as high as 100%, to allow for a wider variation in pay to reflect performance. An obvious starting point is to use the minimum spinal column point from the lowest classification and the maximum spinal column point from the highest classification.

developing a broad banded pay structure

Pay is a fundamental aspect of any bargaining arena and as a result the details of a broad banded pay structure will normally need to be negotiated with the trade unions.
Pay expert Michael Armstrong, recommends the following 12 steps for developing and installing a broad banded pay structure in his publication 'Employee Reward':

• reach an agreement that it is the most appropriate pay structure for progression
• provisionally estimate the number of bands that will be required by analysing the organisations structure and the various roles carried out at each level
• decide on the width of bands, the degree of overlap (if any), the anchor points and pay zones
• carry out a job evaluation exercise to define band boundaries and revise the band structure as appropriate
• conduct a pay survey to establish market rates
• position roles in bands (singly or in clusters) on the basis of relative size as established by job evaluation results and market rates. This will be based on judgement to establish the weight to be given to internal and external relativities. A decision will also need to be made on the extent to which it's policy to provide for market relativities to drive pay decisions
• decide on the basis for progressing pay within zones and for adjusting pay levels following a change in role
• decide on the role of job evaluation in defining band boundaries, guiding band positioning decisions and dealing with new roles or equal value queries
• examine existing rates of pay for employees, identify any increases and establish any cases where pay protection may be necessary
• draw up procedures for managing the structure including the allocation of roles to bands, the use of job evaluation, the conduct of pay reviews, fixing salaries for recruitment purposes or following a change in role, maintaining data on market rates and the use of performance management processes to assist in making pay review decisions
• brief and train managers on the new structure and their roles in managing pay
• communicate the details of the new structure and how it affects them to staff

conflicting pressures

There are conflicting pressures between employers and trade unions in progressing employees through broad bands.

In traditional pay structures the trade unions have sought to link the movement through the spinal column points of the pay grade with the amount of time the incumbent has spent in it. The upward movement from the lowest spinal column point to the next, and up until the top of the grade has been reached, has been automatic with the passage of time. The chief concerns of the unions¡¯ are that the process for determining positions within the band are fair, understandable and free from bias. Automatic time served progression meets these criteria.

Conversely, employers' have often sought to explore methods that can link movement between spinal column points to individual employee appraisal results. The concept of a broad banded pay structure is often viewed as an opportunity to link the introduction of a method or pay that will reward employee contribution. The employers' goal is often to introduce a pay system that rewards individuals whose performance is superior by accelerating their movement within the band.

These traditional trade union and employer positions are founded on two fundamentally different philosophies on pay and reward. Broad banding exacerbates the issue because of the greater range between the bottom and top of the band. However, the two different ideological stances towards progression do not have to be mutually exclusive. It is relatively straightforward to envisage a hybrid approach combining pay that recognises contribution and time served progression. This could be achieved by reducing time served progression to fewer incremental stages and making any further progress contingent on some agreed form of employee contribution.