Section FourBroadbanding
In contrast to skill-based pay, broadbanding retains some of
the components of the traditional approaches described earlier,
such as a job focus and some utilization of job evaluation for
key jobs— visible jobs having identifiable market wage rates.
However, like skill-based pay, broadbanding can be helpful in
strategy implementation because it is directed toward obtaining
greater flexibility. Typically, broadbanding involves a reduction
in the number of salary bands (pay grades). Interestingly,
General Electric was able to reduce its number of bands to five
for all employees. With broadbanding, the organization might
reduce its salary bands for white-collar employees to three. For
example, the first band for professionals might range from
$55,000 to $91,000, the second for management might range
from $58,000 to $121,000, and a third for leadership might
range from $110,000 to $205,000. As these salary levels
indicate, the salary ranges within each band cover a wide range
of compensation. The advantage of maintaining fewer bands is
that employees’ salaries can be raised substantially even
without a promotion. Likewise, employees’ salaries could
conceivably be reduced without resort to a demotion.^28
Broadbanding is used frequently in conjunction with other
changes that facilitate strategy implementation. For example, it
may be used with reengineering, delayering of organizational