Broadbanding is a pay-structure redesign that collapses many narrow salary grades into a few much wider bands, so that one band covers roles that used to sit in two, three or more job grades. Pay can then grow a long way inside a band without a formal promotion.

How it differs from an ordinary band

A conventional pay band typically has a spread of 30 to 50 percent between minimum and maximum. Broadbands are much wider; sources commonly describe spreads from around 80 percent to well over 100 percent. Early examples include a US Navy pay demonstration project at China Lake from 1980, and a National Academy of Public Administration study credits General Electric with the first corporate shift to broadbands in 1989.

Worked example. A company has three grades for analysts:

It merges them into Band B, Rs 6,00,000 to Rs 13,00,000. The spread is (13,00,000 minus 6,00,000) / 6,00,000 = 116.7 percent.

What changes for compa-ratio and promotions

An analyst paid Rs 9,00,000 had a compa-ratio of 9,00,000 / 9,25,000 = 0.97 against the old G5 midpoint. Against the Band B midpoint of Rs 9,50,000 it is 0.95, which says little, because a junior and a senior analyst now share that midpoint. That is why most broadbanded companies stop using the band midpoint and set a market reference point per role inside the band. If the role’s reference point is Rs 8,50,000, the same person sits at 1.06.

Promotions change too. The step from G4 to G5 used to be a promotion with a fixed raise; now it is a move within Band B decided by skill and contribution. That suits flatter organisations and lateral moves, but it puts more judgement in managers’ hands. Without reference points and calibration, pay drifts upward and pay equity gaps become harder to see. Employees who valued a visible grade change may also feel they have lost a career step.

Frequently asked questions

Does broadbanding raise salary costs?

It can. With higher band ceilings, managers face less pressure to hold increases, so set budgets and reference points before the switch.

Do we still need job grades after broadbanding?

Many companies keep grades internally for benefits, eligibility and reporting, and show only the band to employees.

Is it suitable for a 100-person company?

Usually there is little to collapse at that size. Broadbanding is a fix for large structures with dozens of grades, as our pay band explainer notes in passing.

Check where individuals land after a redesign with the compa-ratio calculator.