Question

In: Operations Management

Often a salary structure has ranges—minimum, midpoint, and maximum. Frequently, a market position is drawn from...

Often a salary structure has ranges—minimum, midpoint, and maximum. Frequently, a market position is drawn from the range midpoint. Another option becoming popular is broadbanding. Each method has advantages and disadvantages. You may wish to look at the salary structure and occupational families presented in the U.S. Office of Personnel Management Salary Table 2011-GS, referenced in the Resources. Notice how broad the bands are for individual jobs. Complete the following:

•Analyze the advantages and disadvantages of broadbanding as a compensation plan.

•Conclude your essay by explaining your position on whether you think broadbanding can be successfully competitive in your current or previous work environment, and provide supporting reasons for your position. How might broadbanding help with being successfully competitive compared to alternative salary structure ranges that might be used?

Solutions

Expert Solution

Broad banding

Advantages

The greatest advantage of broad banding can be seen as the greater autonomy which is obtained by the management. In the opinion of Milkovich, with the help of broad banding compensation plans, the managers are able to have the power to compensate the manpower as per their will.The conflicts between the HR department and the hiring managers can be avoided by using such a plan. Apart from this, the commonly thought view that the role of gatekeeper while defining the salary structure of the manpower is also avoided. The broad banding also allows the internal mobility, This is resulted mainly because of the chances of a person's current job and possible positions improves within the similar payment structure and therefore there is no chance or prioritizing the payment more than the position traits. This motivates the internal movement of employees and greater development of prospective jobs.

Broadbanding has the other advantage of streamlining of organizational structure and thus it makes easier for the firms to develop salary ranges.

Disadvantages

It is not possible to have any sort of awareness related to the external market rates as it was possible in case of the conventional salary plan. The current data related o the market rates should be facilitated to the management by the efficient traditional salary structure. Bu in case of broad banding, the market rates are predicted by the managers in the situations where the managers are looking to pay the midpoint or the maximum/minimum rate of the market. Apart from this, the broad banding method of compensation provides the minimum promotion in any firm. Thus the lesser salary bands indicate that there are lesser promotional opportunities in any organization.

Inequity is the other main limitation of broad banding compensation and it is resulted because of greater trust and flexibility in the management of a firm presented to them may or may fail to be warranted.

Perspective on whether broad banding can be competitive in the workplace.

In my opinion, Broad banding cannot be used as a competitive advantage in the organizations. This is mainly due to the fact that the management always looks to have some sort of flexibility in rewarding, retaining and hiring the quality manpower. But broad banding is mainly helpful in simplifying the job classification and controlling the positions but optimal flexibility in the management cannot be accomplished. In fact, this method can result in the exploitation of the employees by the management.   This results in the pessimistic behaviors of manpower towards broad banding plan as it can have some portion of favoritism and discrimination among employees.


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