As with most things, there is no right or wrong answer as each organisation is different. The debate over narrow vs. broad career bands depends on your organisation’s unique objectives and company culture.
Some companies are more hierarchical, while others prefer a level of flexibility. Understanding the pros and cons of each option will allow you to implement the best pay structure for your organisation.
First, let’s go over the purpose of career bands and how they work.
What Are Career Bands?
Career levels or bands represent roles according to the skills and responsibilities required, regardless of job function or family. These skills may be defined at a generic level or a set of ‘impact factors’—e.g. accountability, autonomy, communication—can be defined for each band.
The level of skill and responsibility gets more complex as you move to higher bands. This provides a fair and consistent approach to job evaluation.
Narrow Career Bands
This option will be made up of a large number of grades, which can vary depending on the size of the organisation. This structure is often found in the public sector or where roles are more clearly defined.
In some of these organisations, pay progression is determined by specific increases which were historically based on length of service. This was considered the fairest way to determine pay, but there are a few issues with this approach.
Advantages
- They give employees a much clearer vision of their career path and how they can progress to the next grade or step.
- The narrow bands make it easy for leaders to manage their budgets and costs if salaries cannot go higher than the maximum of the range.
- There are opportunities for more frequent promotions for employees if they develop their skills and increase their contributions.
Disadvantages
- From the organisation’s perspective, regardless of whether employees are carrying out their responsibilities and contributing to the organisation, they continue to receive a pay increase.
- There are concerns around age discrimination and equal pay. If two employees do the same job with the same skills and responsibilities, one could be on a considerably higher salary simply because they’ve been present in the role much longer.
- With narrow bands, there is a danger of what we call ‘grade creep’. As employees reach the top of the band, they demand higher pay. With little flexibility, the only way for leaders to allow this is by moving the employee to a higher grade, but not because they have developed their skills or increased their contribution. This undermines consistency and fairness in the process.
Broad Career Bands
With broad bands, there are fewer levels in the organisation and broader descriptions for each band. This allows more flexibility for changes in roles, responsibilities, and salaries—without always having to re-evaluate roles.
Broad bands are more prevalent in sectors or organisations that need more flexibility, such as financial services.
Advantages
- They reflect non-hierarchical organisations. Roles and responsibilities are far more fluid than they used to be and broad bands allow these changes without HR having to constantly evaluate roles to establish a new grade.
- They result in wider pay ranges, which allow more flexibility for leaders to manage pay. If you are looking to recruit an exceptional candidate who could add a great deal of value to your organisation, but is seeking a higher-than-average salary, you could manage this with a broad pay range, whereas you may lose out to a competitor if you don’t have this flexibility.
- With broad bands, there is much greater focus on the development of skills, lateral movement within the organisation, and retention of employees instead of a constant race to the top. Broad bands are also more likely to be linked with competencies that lead to success in the role and within the organisation.
Disadvantages
- They require a lot more communication and education so managers and employees can have meaningful conversations. As the bands and salary ranges are wide, there are fewer visible promotions and employees may feel that over long periods of time, they don’t have enough meaningful career progression.
- They have wide pay ranges, which means there is more work for the HR team to manage and understand the pay differences that exist for roles within the same band. This means benchmarking more roles to decide where to place them within the wide pay range.
- Broad pay ranges make it more difficult for an organisation to control costs. There is much more scope for pay progression, which also makes it more difficult for leaders to understand and identify equal pay risks.
Making a Decision
When it comes to job levels and career frameworks, there is no one-size-fits-all solution. Both options come with their own set of benefits and drawbacks, and choosing the right one for your organisation may require a deeper look into the structure and goals of your business.
Whichever you choose, it’s important to communicate your decision clearly to employees and provide them with the necessary tools and resources to succeed. By doing so, you’ll create a work environment that fosters growth, development, and success for everyone involved.
If you’d like to learn more about building pathways for your employees and the importance of offering clear progression, we have plenty of resources. This blog post details how can organisations make the most of career pathways to retain their best employees.