Broad banding is defined as a method for evaluation and construction of job grading structure or typical salary band of an organization that falls between by spot salaries against numerous job grades or bands, Broad banding is to establish what is required to pay for a specific positions and incumbents within the existing positions.
Broad banding is the expression useful when an organization with extremely wide salary bands, much more surrounding compared against the traditional salary structures. While a typical salary band has around 40 percent variation in compensation between its minimum and maximum, for broad banding this would characteristically have about 100 percent difference
The advantages of Broad Banding are as follows:-
It Streamlines hierarchy structure within the organization, this helps during a change in the organizational structure
It promotes and facilitates Internal Movement within the organization and is considered to put forward other attributes of a position, other than the pay grade which is already disclosed
Gives more transparency and added trust in management
The disadvantages of Broad Banding are as follows:-
There is absolutely no awareness of external market rates as the traditional salary bands cannot be compare against broad banding
Promotions, Broad banding leads to lack of promotions within the organization as there are fewer salary bands leads to fewer opportunities to climb the organizational ladder.