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Broadbanding structure has been practiced in the field of human resource management since late 80s as well as early 90s. It is a relatively young topic, thus, much of the assertions about the practice have not been verified. The major factor that drove the companies to adopt the structure was the need to adopt an administrative system in the salary as well as human resource that are flexible and efficiently manageable.
Broadbanding is defined as a human resource management structure that collapses the grades of the salaries and ranges into wide but few levels, called “bands”, disregarding the job titles. Each of the bands is, then, subdivided in to a wide job ranges as well as wide salary levels. This practice is implemented in several steps. These include: setting the range of the salary for the bands; the salary ranges are usually wide and overlapping, market value assignment to the jobs in the band; they are subdivided in to the specific job details and levels of skills (Kumar, 2011). The original format of broad banding had a maximum of five broad bands and the salary range was within 70-100%. However, it was restructured to fit the needs of the users and the set limits were nullified to cater for the adjustment to the market salary rates for a particular band. The traditional structure has been eroded and has been replaced with other structures that focuses on the evaluation of the job and meets the equal pay conventional requirements (Armstrong, 2006). The principle behind broadbanding is the requirement of equal payment, where the employees are paid according to their contribution.
It comes in two ways: that is the career way as well as in the terms of remunerations. The career way has specific bands, which are simply classified. For instance, in the federal government, just four bands can be formulated to replace as many as 15 job classes. A good example is the US navy class that has several career paths and job levels, which are all collapsed into different bands. This was a pilot operation mission and paved the way for the development of the structure. Since then, extensive studies have been carried out to determine the applicability of the structure in other sectors (Perry, 2005).
The structure, however, is not applicable to all firms at random. As it has been demonstrated by the studies, the structure favors some organizations that fit a certain ideal profile. Therefore, proper evaluation and the specific needs in an organization as well as the mission of an organization all need to be interpreted and analyzed before one can opt for that structure. For example, consider a networking marketing firm such as GNLD, the promotions in the leadership ladder is the one that motivates the workers to work hard. The firm has, therefore, established many ranks within its structure to encourage the workers to continue working hard, as they aim for the next promotion. The impacts of collapsing this structure to fit the broadbanding structure like, for instance, three ranks will negatively affect the business. Broad banding, therefore, cannot be appropriate in this case. A structure that encourages vertical ascent is more favored in such scenarios. This as well applies to the societies, where the hierarchal ladder is valued as collapsing it may de-motivate the workers, and thus, affect their productivity.
Consider another scenario where the firm is a manufacturing firm. For example, Apple inc., the workers can be broadly classified into three categories. Division I can incorporate all the production workers. These will include the engineers, the designers/architects, and the technical workers among others. Then, a second category, Division II can incorporate the teams that facilitate the business aspect of the firm. These will include, procurement, marketing and public relation, human resource staffs, and finance among others. Finally, the third category, Division III can be comprised of the leadership; the directors and the managers who facilitate the decision making aspect of the business and the implementation of the policies. In this case, the model fits the business needs as the duties will be performed effectively, regardless of the category. The salaries will be harmonized with the market values, and then, the skills as well as hard work can be rewarded to encourage efficiency and innovation. However, this as well should be done with caution as it may discourage those employees who favor the hierarchal system
From the above two examples, it is clear that the applicability of the broadbanding structure depends on the needs of the individual firm. It is also clear that the model cannot be generalized and efforts are, therefore, required to customize the management tool to fit the individual need of each corporation. However, it should be clear that broadbanding is not the only structure that is used in downsizing, there are several other structures applied, according to the specific needs of the company. There are several factors that need to be put into consideration before one can introduce the structure. These include: the competitors compensation rates, the availability of talented personnel, the job diversification range, the expected performance for each employee and the employees expectations on the company culture. These are the general factors that need to be analyzed in other contexts such as the business context; these brings in the matters of affordability, competitive advantages gained, strategic issues, and the organizational culture, technical consideration such as the range numbers, sizes, adjacent range differences, midpoint differentials as well as the overlap degree between the adjacent levels. Furthermore, the number of the ranges is determined by several factors such as: the skill numbers/responsibilities distinctions as demonstrated in the job worth hierarchy, the supervisor-subordinates relationships that are available in the structure and finally, the availability of the resources.
The structure has several benefits that are accrued to the use of it. It becomes more flexible to move employees from one job to another within a particular band without necessarily promoting them to higher positions just to facilitate the increment in the payment as the salary increment can be implemented in a group. Each band may consist of several jobs with each being assigned the value in the market. The bands may, then, be subdivided in accordance with the skill level. This reduces the cases of workers being paid salaries above the market value for seniority or well done job. Rather the focus is shifted into excellence in terms of skills, abilities and knowledge. This encourages the workers to expand their knowledge and improve their value to the company. Other benefits of adopting this structure include: the support of the overall strategic and organizational changes, including the downsizing and cost cutting strategy, allows the flexibility of the compensation to the employees, facilitates flattening of the hierarchies and reorganization into self-managing teams, which are more effective, it is more useful in the firms that have boundary less jobs and which are less specialized. This is so since in highly specialized jobs, it is difficult to horizontally classify the workers in to one large group (Kumar, 2011). The worth value of an employee is not evaluated, based on the salary grades, and the mobility from one rank to another; but it is done, based on the person’s performance and the skills acquired, which translates in to the level of relevance to the firms. This focuses the emphasis for salary increment and promotion to the development of skills and competencies, which is to the advantages of the company. The traditional movements either upwards, lateral or downward can be easily done without stigmatization of the job classification and grades. This structure can be particularly effective for multitier management levels that can rip the benefits of cutting down the number of levels and add a wide salary range, and then, assigning each of the managers a level to run. The structure as well enhances the employees’ satisfaction, thus, motivating them as the frustration of striving to climb the ladders is leveled (Arthur, 2004).
Constraints of Broadbanding
The structure is not without setbacks. The structure reduces the promotional chances and may not be effective in societies, where titles and positions matters most. The traditional belief that made the people to work hard and it was coveted by majority loses its impacts. The structure is more effective in the environments, where there are multiple classifications of the jobs. Examples are universities, state governments and colleges. This is so as different jobs across the several departments can easily be grouped together (Arthur, 2004). This structure may foster the managers to give the increments, based on the performances more freely, this, in turn, could make the performance appraisal more pronounced, and thus, escalating the costs in terms of compensations significantly. This will reverse the notion of cost cutting last source. The structure if not carefully monitored could lead to a level salary, where the supervisor and the subordinates earns the same. This will reverse the notion and the common belief that hard work pays. On the macro-economic view of the principle, the question of inflation arises. This is so as the earnings are only limited by the mount of the hard work that is employed by the employees. Another complication is the fact that it becomes difficult to compare jobs with the market as the pays, which are used as the indicators, are not standardized.
Several researches have been conducted on the subject. The subject can be said to be maturing in the sense that most of the researches on the implementations have been overcome. The current focus is on the repercussion or impacts of the implementation. The topic being relatively young, much of the information on the subject is yet to be compiled. The available information is, sometimes, conflicting with some researchers, advocating for it, while others going against it. The major hindrance for the obstinacy of accurate results is the fact that the structure is implemented together with downsizing as well as restructuring, and therefore, the resulting observations are mixed up. The focus of the research ought to be shifted to show the actual impacts of the structure on the several indicators such as the costs and the general productivity.
The question as to whether the structure fulfills its intended purposes has not been answered satisfactorily. This is due to the fact that majority of the firms that implement it don’t formulate a tracking mechanism to guard against it. Another portion does not track the impacts on the cost, thus, making it impossible to make any conclusion on the subject (Mathis & Jackson, 2002).
This structure has been tested and implemented in various corporations and state government agencies. An example of such is the Belgium Governments. For years, the Belgium Government has been working to introduce regulations that will ensure efficiency. These have included new codes, rationalization in terms of grades and ranks, new classifications of the job categories among others. All these efforts have been geared towards the implementation of a performance based system and delineating specific roles to the senior managements. This has as well geared the efforts to look for tools to facilitate these transformations such as balanced score cards, performance measure indices among others. The efforts have been the trend in all the other OECD countries, but Belgium has emphasized much on the specific roles for the senior managements and competency. This has seen the government veer off from the traditional vertical management system in the favor of broadbanding system, which facilitates lateral mobility of labor.
The federal government has undergone various reforms in the human resource management strategies in an effort to improve the delivery of the services. The broadbanding structure is demonstrated by the introduction of performance based remunerations plus minimum bonuses on excellence. The civil servant undergoes a competent training course, where upon completion they are allowed a year bonus. However, this practice was scrapped in the lower ranks, awing to the complications in the evaluation of the performances. It was only retained for the senior management staffs to encourage them to work hard and improve the performance of the groups that work under them. The promotions to the higher ranks as well as salary wise are discrete and are mostly based on the performances. Although this practice has not been enacted as a law by the federal government, it is widely accepted, and therefore, it is most likely to become a law in the future. This has seen the several Federal Government agencies adopting the broadbanding structure. This has been warmly welcomed due to the fact that there has always been a complication in the manner, through which the salary increments and promotions are handled as a result of the high regulation in the Government sector. The move as well has been credited, owing to a number of benefits that have emanated from the adoption. These include: improved transparency, strong trust in the managements and excellent management strategies.
Casual workers have not benefited much from this transformation; this is as a result of the fact that as in any other place the casual jobs are not regarded as careers. The chances for promotion are few, and therefore, workers tend to work in one group for a very long time. The contractual workers as well have not benefited much from the initiative. Efforts are being made to ensure their rewards for their dedications. These include assurances for a new contract in the future, which is tied to the performance in the current contract, motivation in remuneration increments or being offered permanent posts, tied to their performances (OECD, 2007).
Another firm that has adopted the broad banding HRM structure is the Toyota Corporation. Owing to its size and the international presence, the traditional hierarchical system would have been unmanageable. The frustrations in the efforts to gain recognizance and possible promotion would have hampered the productivity. Instead, the company adopted the broadbanding structure. The structure has been customarily designed to fit the needs of the company, comprising only three broad categories. These include: Division I, which include all the staff in the production unit. The second broad category is Division II, which consists of all the staffs in the general maintenance. Then, the third and the final category includes the tie and dye members. By categorizing the workers this way, the group was able to improve the efficiency. This is so as the struggle and the striving for the top positions, as is the case in other organizations, were eliminated. Instead, the focus was shifted from the individuals to concentration on the work at hand, thus, the improvement in the delivery of the services. This way the lateral transfer within a band is made efficient without the needs for promotions. Also, the nonperforming employees can be taken to the lower without the issue of stigmatization ranks arising. The structure specifically fits in the company’s specific needs and has proved to be efficient in the years it has been used.
General electric is another firm that adopted the broad banding structure in its operations. It downsized the hierarchy groups into only 5 groups (Kumar, 2011).
Another organization that has adopted this structure includes Apple Inc.; the company outsourced its production with the operations being carried out in China. The human resource is run in such a way that the organization is divided into just a few categories with the majority of the workers working in the production level. However, the complication of the labor laws in China makes it not possible to employ the full features of the broadbanding. This is in the sense that the government in that country advocates for equality in the salaries.
There are several other countries, which use this structure in their operations. Others use a hybrid model, which combines several factors to come up with the most appropriate structure.
This structure is applicable in societies, where the hierarchal advancements are not very much valued. Several surveys that have been carried out on the companies that adopted the study reveal that; majority of them does not admit to any reduction in the operational cost. However, the surveys reveal an improved satisfaction in the work place. This is as well displayed by the fact that the majority of the workers took the initiative to improve their relevancy to the company. That is 86 %. When asked if the skills are useful outside the company only 60 % were positive. Upon the adoption of implementing the structure, indicators should be put in place to monitor the progress and the impacts of the implementation. This may include establishment of a baseline upon where the progress are cross referenced and the indices such as the cost and production output be used.
From the above researches and analysis, it is clear that broadbanding just like any other structure has got the advantages and the disadvantages. The applicability of the structure depends on the organization missions and objectives as well as the nature of the employees. The system shifts the focus of hard work from the traditional hierarchy to other options without necessarily being promoted. Broadbanding, in itself, does not provide solutions on the development of new skills, career planning or even the progress. But in it, there is the facilitation of the learning process as an appropriate environment is given. This is done through the introduction of conditions that make learning advantageous and the organization is given the responsibility of paying for the learning. This helps the organization to improve their performances. The structure for sustenance needs to be evaluated, the steps includes the facilitation of the acquisition of the formal skills, communication and advice on the way of maximizing their value to the company.
Further researches ought to be undertaken in order to enhance the understanding of the benefits as well as the constraints of the structure. This will also enhance the necessary modification to be effected for the betterment of the model.