Companies have had career banding or broadbanding as a compensation program option since the late 1980s. Career banding sets salary ranges or “bands” by job families, each of which carries an assigned competency level. It shifts focus from the job to the job holder, thereby encouraging employee development and instilling a “performance culture” throughout the organization.
Career banding grew from the need for a more flexible compensation program that would contribute to business objectives and reduce administrative costs. Traditional pay plans attach importance to where a job falls in the organization’s hierarchy. Career banding transfers that importance to the knowledge, skills and abilities (KSA) needed to perform a particular job. This emphasis on employee development results in a more skilled workforce and increased productivity. Also, lateral career moves under career banding become more attractive from a cross-training, career-growth perspective, enabling the company to better use existing talent.
According to the University of North Carolina Office of Human Resources, career banding assigns all positions to a job family representing a “general field of work.” Each job family has “branches,” which then are categorized by roles or classes. At the university, information technology (IT) is a job family with two branches--systems and support. IT systems contains the role or class of analyst, IT support, technician.
Career banding uses three competency levels, each assigned a pay range usually based on prevailing market rates: contributing (entry-level), journey (experienced) and advanced (expert). Employees’ pay reflects the extent to which they demonstrate these competencies. As they acquire more skills, they move to a band with a higher pay range.
Department managers and supervisors use a three-point scale when evaluating an employee’s competency: "1" for “demonstrating,” "2" for “applied” and "3" for “broadly applied.” Standards are set to ensure uniformity throughout the organization. Evaluations then form the basis for employee training and identifying career path choices.