BROADBANDING- THE NEW SYSTEM TO PAY EMPLOYEES

ABSTRACT

This paper describes the advantages of the broadband pay system, such as the large number of job levels
will be reduced to a few, pay scales of pay administration should be simplified, the staff's focus shifted
from the position of performance improvement and promotion of self-Development up and so on. Also
discusses the limitations of the system, such as the salary scale development, public acceptance, as well
as the cultivation of employee loyalty. Enterprises should be combined with the concrete practice of use
of them.

 INTRODUCTION

Business models alter with the economic cycle and market swings. Additionally, the change in
government policies towards the industry impacts in transformation within an organization. As the
production adopts a new model different areas including spending, talent billing, and employee
management vary with the flow. These transitions results from business scaling up, mergers and
integration, de-mergers, revamp and restructure. Few HR processes may bear the effect from such
transitions. This fundamentally includes compensation, performance management and HR operations.
HR Programs including broad banding, mapping of HR Systems, Integrating technologies, abiding by the
legal guidelines, compensation alignment tops the priority list. Human fears of losing identity, expecting
shrinkage in compensation, low visibility remains principal. Among the above mentioned transition
results those which majorly impacts the compensation structure are:

Expansion: The process that impacts the most is recruitment and training. The chief focus remains on
getting talent on board and train to place them as billable.  This does impact the compensation bench
marking to bridge the salary gap between the new and the old talent during the annual performance
appraisal. The concept which the HR accentuates in this situation is ‘What it means to work here’.

Restructuring: Every business cycle goes through a phase where the process of productivity is reviewed
to scale up production and minimize cost.  The revamping of production results to the restructuring of
the work-force. The jobs are mapped to the talent with best-fit. Levels are brought down to few bands
and grades. Tata Steel had revamped the work force from 13 to 5 levels redesigning 5100 officers to
4300 officers. The Human factors to be dealt in this situation are the stigma of termination and
transparency to build on the trust, of the talent which remains behind. The outplacement offered by the
organization,

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DEFINITION

“Practice in which the number of grades in a pay-scale structure is reduced, and the differential
between one grade and the next is increased. Broad banding is said to decrease intra-firm rivalry in
employees and to increase inter-firm (or cross-departmental) flexibility.”

However, employers that are considering adopting a broadband approach need to be careful, warns Jay
Schuster, a partner in Schuster-Zingheim and Associates, a Los Angeles-based compensation consulting
firm. Schuster and Patricia Zingheim are authors of The New Pay: Linking Employee and Organizational
Performance. "Broad-banding appears attractive, because it appears to permit an escape from the
pitfalls of traditional base-pay systems while avoiding the difficulties of moving to skill-based pay,"
Schuster said.

Skill-based pay With a skill-based plan, compensation depends on the level and proficiency of
employees' skilled .Employers that have successfully used skill-based systems include Johnson &
Johnson, Honeywell Inc., General Electric, Digital Equipment, and Procter & Gamble, just to name a
few.

According to Schuster, these employers have found that their skill-based programs have improved

 Employee involvement

 Workforce flexibility,

 Employee versatility,

 Teamwork

 Use of technology.

EVOLUTION

Broadbanding evolved because organizations want to flatten their hierarchies and move decision-
making closer to the point where necessity and knowledge exist in organizations. In flattened
organizations, fewer promotional opportunities exist so the broadbanding structure allows more
latitude for pay increases and career growth without promotion. Broadband pay structures encourage
the development of broad employee skills, because non-managerial jobs are appropriately valued and
skill development is rewarded. Additionally, a broadband pay structure is not as sensitive to changing
market pricing conditions, so they cost less to administer and manage over time. They also provide
serious non-promotional income opportunities for employees. 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

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normally related to competency based, performance, contribution or market rates of pay.
Broadbanding and skill-based pay are terms that compensation specialists toss around a lot these days.
But what exactly are broadbanding and skill-based pay, and are they viable alternatives to traditional
compensation packages?

Simply put, broadbanding is a base-pay technique that reduces many different salary categories to
several broad salary bands. Many employers are moving toward a broadbanding program because it
seems like an easy way to reform their traditional base-pay plans.

Wages as a business to employee recognition, in human resources management is crucial. In theory,

wages should be the wage Structure in line positions corresponding to different values to determine the
value of wages, but in fact if each position corresponds to an enterprise-specific wages, then wages will
be very heterogeneous management. Thus, in practice, enterprises will be a different job classification,
according to job evaluation carried out in a range of duties as a class, paid the same wages, greatly
simplifying management. However, this approach simplifies not go far enough because the range of
different positions within the pay received by employees of convergence, there is an element of
unfairness, in order to try to weaken this factor can not be divided into intervals too large, so division is
still more after the job hierarchy. In this case, the broadband pay system came into being.
        Broadband will soon pay the original essence of a number of different remuneration for the pay
grade compressed into several levels, while the pay level for each one corresponding to widen the scope
of the pay floating, creating a new salary management system and operational processes. The system of
duties and remuneration of the original pattern of relationships between the peer into a pattern of
relationships face to face. Because several pay grades include a large number of job classification in each
pay grade has a large salary increase on the corresponding, this correlation was belt trend, so called
broadband pay system. In this system, due to a drastic suppression of the pay grade, salary
administration more concise. The salary ranges for each grade pulled large, at the same level no longer
compulsory in remuneration between employees seeking common ground, you can change in a larger
salary range.

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.

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ADVANTAGES OF BROAD BANDING PAY SYSTEM

                Broadband pay system compared to the advantages of traditional compensation system,

summarized in the following points:

        1. To build a harmonious Culture of the team: The traditional salary system is based on job
pay, that is, pay the same as the same position. Here, the pay does not reflect the positive role of
performance will lead to staff from emotional damage, resulting in lower performance. At the same time
because of job and pay the corresponding relationship between the stress, but also easily lead to
'Political act' (political behavior), that activity does not require the organization's activities, but they
affect or may affect the distribution of benefits within the organization . Decision-making has been
promoted to the political behavior of the organization one of the reasons most frequently. In order to
obtain high-paid employees to be promoted to high positions, but to be promoted must compete for
limited resources. The appropriate degree of healthy competition is good for enterprises, but higher
positions is limited, meet all needs, often led to vicious competition. This business performance,
employee relations and team-building is negative.

2. A sense of equality and fairness is ensured : In the broadband pay system, a large number of
employees were included in the same pay scale in between them there is no gap in pay levels, this level
of unity based on giving the employees a sense of equality. In the same salary, the staff has their own
access to different salaries because of their performance, low-duty staff salaries may be far more than
the high office staff, such differences in performance-based employees are given a sense of fairness. A
sense of equality and fairness to ensure a sense of employees to adopt a positive attitude to improve
performance, and a calm attitude towards pay. At the same time, the staff well aware of the pay gap
due to the performance rather than the job, their focus shifted from the promotion of job performance
improvement and self-development up so as to enhance healthy competition based on performance,
and weakens the promotion generated due to the vicious competition , which will help the staff to
create a harmonious atmosphere within the team culture.

        2. Encourage high-tech talent: Today's society, high-tech talent as the enterprise sustainable
source of competitiveness is a key factor in competing for business.  In the traditional salary system,
high-tech workers want higher pay, or switched to other businesses, either through the promotion of

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job level (for example, take the administration to change the road) to achieve, both of which cases are
business do not want to see into. The former is a dominant brain drain, while the latter is a potential loss
of talent. Because high-tech personnel with the exception of a few management skills, most of all
focused on the skills of a technical field, so that they maximize the utility is allowed to perform
professional technical work. However, due to the unreasonable compensation system design, high-tech
talent to seek high-paying does not only turn their good management of the road, which in fact is the
talent stifled.

        In the broadband pay system, due to the same pay scale, salary range of large, high-tech employees
in the class can also be achieved with the higher rank staff (eg managers) the same pay, which allow it to
focus on the technical level to enhance and the contribution of business performance without having to
force yourself to excel in their career path is not to develop. Since this makes the high-tech workers do
not have to give up their career line can get paid leave, which has a strong incentive. At the same time
that such a pay system is the implementation of all the staff against the company to avoid
discrimination.
        3. Flexibly respond to rapid change : The duty of the change, post conversion, outside the labor
market supply and demand will cause a change in the traditional salary system, 'slight situation as a
whole' knock-on effects for human resources management, heavy and cumbersome, but is not
responding to external changes in a more timely manner will lead to the brain drain.  In the broadband
pay system, because of the pay scale large span, the changes in positions of responsibility by the
majority of job evaluation is still within the same pay scale, their pay only to be adjusted in the hierarchy
without affecting the salary system as a whole.

THE LIMITATIONS OF BROADBAND PAY SYSTEM

        Although the above described various advantages of broadband pay system, but in practice there
are limitations.

        1. Pay Scale difficult to draw : Broadband pay system characteristics and advantages are based
on the salary scale classification, salary scale and division of simplicity and accuracy is the key. However,
as the end, the degree of compression of job classification (ie, for each salary level include the number
of posts) as well as the definition between the two pay scales are not specific targets, which makes the
division of the pay scale is very difficult to operate. If the salary is too small, too many levels, including
job, then lost the meaning of salary grading, but also increased the difficulty of performance
management, because the more the less the pay scale will increase the dependence of performance
management

        2. Public resistance: As the broadband pay system, performance above all else, pay the release
of breakthrough in his post, job restrictions, leading to the problem of unequal wages highlighted. The

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equal pay for equal as 'Labor Law' in one important principle, has been the allocation of equity
compensation obvious signs, but also widely accepted by the public. This principle holds that because in
the same position on the staff are facing the environment, challenges and work standards are the same,
so the employees in the same positions as long as the meeting works standards should take the same
pay. Broadband-only performance pay system, pay is a subversion of that principle, which makes it
difficult to accept the public will be enormous resistance to its implementation.
       

 3. Too much emphasis on material incentives : As the broadband pay system to focus on
performance, while the results of high-performance rather than the promotion and pay are directly
linked, making acts of employees to rely solely on performance incentives. Incentive effect of this single
is limited, according to Maslow's hierarchy of needs theory, the material to meet the needs of more
relatively low-level, while the promotion is to better meet the needs of high-level.

When employees reach a certain level of material satisfaction that inevitably produce saturated,
the role of material incentives is not obvious at this time, the staff turned to the pursuit of promotion
satisfaction. At the same time, as companies to attract, motivate and retain staff of the measures are
focused on salaries, employee seniority, qualifications are no longer considered, it is not conducive to
foster employee loyalty, while providing for higher wages, employees of enterprises appears likely to
jump ship.

        To sum up, broadband pay system in the team-building, motivating employees, to respond to speed
with its advantages, but the salary scale into difficulties, the public and inspire the low acceptance of a
single material limits the application of the system. Therefore, enterprises in practice according to their
own circumstances and their environment should choose to use, bring into full play the positive role of
the system in order to promote enterprise compensation management.

CONCLUSION

“Broad banding is more of a vehicle to deliver specific new pay solutions than i is an independent
program to solve an employer's compensation problems," Thus, employer must align Broad banding to:

* Support organizational strategies.

* Encourage employee involvement.

* Create an effective economic partnership.

* Reflect external job market differences.

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* Support team performance.

These elements are central to any compensation strategy. The goal is to make both the employer and
the employee "winners" in the compensation game.

"The key to success is to define your goals clearly and then carefully pick the new pay solutions that
work for your organization,”.

REFERENCES

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4. http://www.citeman.com

5. http://www.sitehr.com

6. http://www.hrdm.net/em/par_performance.htm

7. http:www.hrdm/net/wiki

8. http://www.businessdictionary.com/def/broadbanding,com