Library Worklife

HR Practice

Alternative Compensation Plans

Broadbanding and Pay for Performance

By Paula Singer

This article has been adapted from Developing a Compensation Plan for Your Library; Chapter 10: Trends; by Paula Singer; © 2002 by the American Library Association. Developing a Compensation Plan for Your Library is available from the ALA Store at www.alastore.ala.org. You may contact Paula Singer at pmsinger@singergrp.com.

Broadbanding is a concept that has been in existence for approximately twenty-five years, which was developed by for use in two U.S. Navy laboratories in California. "It involves grouping federal pay grades into several pay bands and permitting greater flexibility in setting pay, promotion, and reassignment within the broader pay band," according to testimony of Myra Shiplett, Director, Center for Human Resources Management, National Academy of Public Administration. In Issue 3 of Library Worklife, 12% of survey respondents had experience with broadbanding in their libraries or library systems.

Pay for performance, on the other hand, has been incorporated into 42% of survey respondents’ worklife. With pay for performance, salary actions and rewards are directly related to employee accomplishments and goals during the evaluation period.

Broadbanding

It was created in the early 1980s and used at the Navy’s China Lake and San Diego Weapons Lab and called the Demonstration Project Pay for Performance Plan. Broadbanding refers to the combining of existing job classifications and ranges into wider pay bands. While more commonly adopted in the private sector, several public jurisdictions, parts of the federal government, and few colleges and libraries have designed their salary structures with much broader salary ranges or bands encompassing more diverse jobs with appreciably different pay levels. While broadbanded ranges in the private sector are often 100 percent or more from minimum to maximum, they are usually quite a bit less in the public sector and higher education realms. The ranges are designed this way to encourage lateral transfers instead of promotions, facilitate the ability of employees to enrich and enlarge their jobs without the necessity of a reclassification or promotion, and improve recruitment and retention efforts, especially when competing with the private sector. Broadbanding has also been combined with skills- and knowledge-based pay to provide room for salary growth in a pay range or band for learning the skills required to perform new tasks.

A number of universities, libraries, and colleges have customized modified broadbanded systems: pay plans with fewer grades, wider ranges (allowing for recognition without reclassification or promotion), and the ability to develop people via horizontal movement. In one university, a plan for career progression was made available through broader job description that were designed around key activities or results categorized as basic, intermediate, and advanced. In this instance, flexible policies were written and managers were empowered to make pay decisions to move employees through the range based on equity, competency, market, and budget.

As a tool, broadbanding should be implemented to respond to a need. It can be implemented to encompass your entire structure, to support an organization redesign to a multifunctional team-based structure, to use in combination with skills-based pay, or to respond to challenges in recruiting and retaining employees. There are a number of drawbacks to broadbanded systems. Most of them revolve around the difficulty inherent in their administration. While jobs are slotted into a "target range" within the broadband, employees often believe that regardless of their position and its duties, tasks, and responsibilities, they will be eligible to earn up to the maximum of the range. Managers also find these systems difficult to administer because they often are not trained to make these types of pay decisions and find it hard to "just say no."

Pay for Performance

While the trend is that some private sector companies are leaving pay for performance in favor of incentive pay plans, many public organizations and institutions of higher education are just beginning to take it seriously. While managers in companies are accustomed to holding the accountability that goes with making pay decisions within open ranges or broadbands, most traditional public sector plans are steeped in the traditions of awarding automatic step and cost-of-living or other increases. Pay for performance is a more objective and systematic method of awarding merit increases based on continuous improvement.

Today more libraries are moving toward "performance management" by modifying or overhauling their traditional performance evaluation systems. Performance management systems embody the following six key characteristics:

Individual performance objectives are tailored to each employee’s job. Objectives show appropriate linkage to department or library goals. Interim performance discussions occur between the employee and supervisor. Library-specific competencies are in place that describe the behavioral expectations of all employees.
An internal or external customer feedback feature may be included as a feature of the new performance management system. An employee development plan builds on the employee’s career and professional interests.

The linkage (from the results of employee contributions through the performance management plan) to pay is clear and more objectively determined than in traditional compensation systems.

This article concludes this series from Developing a Compensation Plan for Your Library by Paula Singer.