written by | April 15, 2022

What is Broadbanding and Broadbanding Pay Structure?

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One of the basic aspects of the business is setting up the structure for the payouts, i.e., the salary of the people based on their skills and role in the company. The salary in the payout must be set in a manner so that each of the employees, workers, traders or anyone connected with the company is satisfied with the received amount. In the traditional payout structure, where there are many positions and job posts, the salary range decreases greatly.

On the other hand, the broadbanding system is an evolved and efficient system of evaluating the employees' salary where the position or designation of jobs is less. The individual is paid for the skill and role in developing the infrastructure.

Did you know?

Broadbanding helps an HR manager to evaluate an employee’s salary based on their skill and potential to aid company growth.

Broadbanding and Its Importance

What is Broadbanding?

Broadbanding is the structure of the payouts for evaluating and estimating the salary of the people working along with a company. We should not compare the broadbanding system with the traditional payout structures where their people are paid according to the designation or position in a company. In contrast, broadbanding is a structure that depends upon the skills and roles of an individual in a company and how much they have contributed to the company's growth. Therefore, broadband is considered a more flexible payout structure than other traditional structures.

Setting up the pay structure according to the broadband system helps encourage the employees to work more efficiently and effectively for the company as they get paid for their skills and development strategies. The basic principle of the broadbanding pay system is to keep a limited number of jobs and a smaller number of high-ranged salary payouts. In contrast to the traditional structure where there are many jobs with different post levels with low salary ranges.

Who Uses Broadbanding?

Human Resource Management adopts the broadbanding system. Human Resource Management itself is a business or a company infrastructure that does not have many jobs or positions open for individuals. On the other hand, it has a limited number of jobs with the designation and the role of improving and establishing the beneficiary movements for the infrastructures. Therefore, the payout system is evaluated and estimated with the help of broadbanding systems. The basic reason behind evaluating the salaries based on broadbanding in HRM is to encourage the employees and workers to work with their better efficiency and benefit the management.

However, several other structures or business companies might use broadbanding systems for evaluating salaries. Due to its flexible nature and structure, the broadbanding pay structure is being adopted by several companies. Some of them are:

  1. Hierarchical companies
  2. Large corporations
  3. Business looking to scale
  4. Lean business
  5. Creative agencies
  6. Start-ups

How Does Broadbanding Work?

The basic working of broadbanding is to classify the roles and designations of the employee in a company and manage the business's overall structure. The working protocol of the broadbanding system can be categorised into three main roles. 

1. Setting up the Growth Plan

A proper growth plan for the company must be set, and every employee must be allowed to choose their respective fields in which they have a skill and passion. Therefore, the employee's work, which positively affects the growth rate, will determine the salary payout for that individual employee.

2. Explaining the Management Structure

However, there must be a management structure for the employees' work and their roles. Mostly everything must be generalised and recorded responsibly. Each employee needs a supervisor, manager or leader to guide them properly and nourish their growth rate.

3. Evaluating the Salary Based on Job Interview

Most of the basic part of the salary must be evaluated during the job interview of the employee. This is because the job interview plays a great role in determining the individual's skill and passion and assuming the future growth rate of that particular individual within the company.

Advantages of Broadbanding

Broadbanding is one of the best payout systems in the business field. There are several advantages of broadbanding. Some of them are:

  • It plays a vital role in improving the focus and dedication of the employee toward their job. As the range of the payouts is much wider, the employees are curious to take on more and new projects for the company's development.
  • The broadbanding system is one of the simplest payout systems. The employee's growth rate is managed and recorded upon which the salary is determined.
  • It provides numerous opportunities for the employees as they can attain promotions based on their skill and passion, and dedication to the company.
  • The broadband payout system provides a salary range that completely satisfies the employee who is working for the infrastructure.
  • Broadband provides employees with opportunities to explore their skills and passion by taking up new and challenging projects.
  • As the payment is made based on skills and passion and not on the job posting level, there is no hectic demand for a specific job position.
  • It reduces the hustle and bustle of getting appointed based on the job skills as it is one of the most flexible payout systems.

Apart from having many advantages, the broadbanding system has some drawbacks. Some of the disadvantages of the broadbanding pay structure are:

  • The broadcasting system faces a drawback in the infrastructures, which are multi-level companies with more than thousands of employees working under one roof.
  • It is difficult to manage the payouts of a large number of employees working under the management system as there are different payout schemes for different departments.
  • The broadbanding system encourages the employee to take up new projects, but sometimes the new project may not benefit the company.
  • On the one hand, broadbanding is flexible, but on the other hand, it becomes confusing when the pay range and the gap the salaries are widened.

Conclusion

When it comes to evaluating and estimating an employee's salary, the broadbanding system is one of the best systems in the business field. Another traditional system evaluates an employee's salary based on their job position. At the same time, the broadbanding payout system focuses on the employee's skills and passion and the role they played in the development and growth of the company. Broadbanding is a flexible and easy to manage payout system that provides numerous opportunities for the employee. But, there are many disadvantages related to the broadbanding payout systems.

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FAQs

Q: Which companies are adopting the broadbanding payout system?

Ans:

Most widely, Human Resource Management has adopted the broadbanding payout system as it causes the growth and development of the infrastructure effectively and efficiently. However, many start-up companies, creative agencies, lean businesses, large corporations and businesses looking upscaling are adopting the broadband payout systems for salary evaluation.

Q: What are the drawbacks of the broadbanding system?

Ans:

Apart from having many advantages, the broadbanding payout system has several disadvantages as well as broadbanding is not very flexible in terms of scalability. However, it becomes quite difficult to manage the broadbanding payout rules when the number of employees is more similar to global infrastructure. Moreover, sometimes it causes a great level of confusion to widen its pay range.

Q: What are the advantages of broadbanding?

Ans:

Broadbanding had several advantages in the business field of human resource management. Some of which include improving career development, enhancing the opportunity for attaining promotion, and enhancing the skills of the employee working in a company. Moreover, it provides many opportunities for the employee. It encourages them to opt and take on new projects to develop the infrastructure. The broadbanding pay system is easy to manage and flexible.

Q: What do you mean by the traditional payout system?

Ans:

The traditional payout system is the salary evaluation system of the traditional companies that sets an employee's salary based on their job levels and positions. It is basically adopted in companies that follow the hierarchical system. In such payout systems, the employee does not have the opportunity to attain promotion easily. Therefore, the broadbanding pay structure is prioritised over this traditional payout system.

Q: What is broadbanding?

Ans:

Broadbanding is an evaluation system that determines the salary of an employee based on their skill and passion and the role of an employee in the development and growth of a company. The broadbanding payment system is very flexible compared to the traditional payout system, which sets up the salary for the employee based on the job position.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.