Magazine

The art of pay banding

April 1, 2001

By Eric Yoder

ay banding, also commonly called broad banding, varies in its design. But it generally involves changes in classification, compensation and performance evaluation practices. Job classification typically is greatly simplified. Under pay banding, occupations generally are divided into career paths with pay set in bands representing such classifications as entry-level, trainee, journeyman and senior-level. These classifications replace the traditional General Schedule grade and step schedules for pay-banded occupations.

On hiring or promotion, employee pay may be set at levels in the pay band deemed to be appropriate to the person's qualifications, education, training and experience. Supervisors may conduct annual reviews to decide how total compensation should be adjusted, which can be an increase in base pay or a one-time cash bonus. Employees typically progress up through the pay band if their performance ratings are good, rather than progressing up through a grade by steps based on time in the grade.

Pay banding also features pay for performance. Employees who exceed expectations might get incentive pay increases exceeding governmentwide average raises, while those who fully meet expectations may get only the average raise and those who do not meet expectations may get only part or none of that raise. In other designs, those getting satisfactory ratings are eligible for performance pay increases, bonuses and annual adjustments to basic pay and those with unsatisfactory ratings are not eligible.

Rating systems under pay banding typically are designed to measure an employee's effectiveness in relation to organizational goals. Training and other career development opportunities are emphasized.

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