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Ann,

I agree with your assessment of broadbanding. Only about 17% of firms use it, according to Mercer surveys. It was an overhyped concept in the 1990's.

Like your new format.

Frank

Frank:

Thanks for the comment and the Mercer statistic on broadbanding prevalence - that's one I don't have.

While the concept certainly peaked in the 1990's, I still get the question on a regular basis, and so thought it worth addressing here (in my always-opinionated way!).

While the concept certainly peaked in the 1990's, I still get the question on a regular basis, and so thought it worth addressing here (in my always-opinionated way!).

I love your opinionated way, but I fought this battle through most of the (very new) 21st century. I worked for two large organizations who were saddled with inadequate salary ranges and prefered to "buy" a new solution rather than do the hard work to fix the existing ranges. It taught me that the way companies manage compensation is a true indicator of shareholder value.

Laurie:

Thanks - that makes ... two of us! I suspect that more than a couple of organizations "purchased" a broadbanding system as a way to finally escape the drudgery of managing a base pay structure. And I agree - that decisions like these say a lot about the company. See last Tuesday's post about Fortune's "Most Admired" and executing well on the basics.

Appreciate your stopping by and commenting!

Never had a positive experience of any kind with broadbanding. Most frequently found the best to be merely a mask overlaid on a conventional grade/value system. They are useful for broad categorizations of the type needed for management development and internal equity peer-rank statifications, but they are toxic to competitive pay systems, merely exacerbating conflicts at the margins. Being in Band 3 v. Band 4 is a lot more pay-significant than being in Grade 12 or Grade 13. Plus, you must pay in excess of market-clearing rates, or your band minimums will be inefffective, so they encourage excessive overpay scenarios popular with all.

Broadbanding has been mythicized and now I have to face it in my organization. My company is a pharmaceutical manufacturer and my boss would like to apply broadbanding in the whole company. I would say it works for the pharmaceutical/technical professionals only but it would certainly be a disaster if being applied to all.

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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