Broadbanding

A compensation redesign that collapses many narrow pay grades into a smaller number of wider salary bands.

Broadbanding is a compensation architecture practice where a company consolidates a large number of narrow, tightly defined pay grades — sometimes 15 or 20 or more — into a much smaller number of wider salary bands, each covering a much larger range of pay and often multiple job levels at once. Where a traditional grade system might have a $8,000–$12,000 range for each of 20 grades, a broadbanded structure might collapse those into 5 bands, each spanning $40,000 or more and covering several job titles and seniority levels within it.

The stated rationale for broadbanding is organizational flexibility: flatter companies with fewer formal hierarchy levels don't map cleanly onto a 20-grade ladder built for a much more layered organization, and wide bands let managers move people laterally, expand responsibilities, or adjust pay within a role without triggering a formal regrading process every time. It also fits organizations that want to de-emphasize rigid title ladders in favor of skill and impact-based pay decisions made within a broad range.

The tradeoff is reduced transparency about where, precisely, an individual sits and what the next step up actually requires. A traditional narrow-grade system makes the path to the next grade explicit — hit these criteria, move up a defined amount. A wide band gives a manager much more discretion over where within that band someone lands, which can be an advantage (flexibility to reward standout performance without a formal promotion) or a disadvantage (more room for inconsistent or biased pay decisions to go unnoticed, since a wide range makes both a fair outcome and an inequitable one look similarly 'within range').