Many organizations have formulated the wage payment system based on the contribution of the result of the job to the common goal of the organization. Compensation policies of any organization must have provisions of timely review of payment structure in order to consolidate the resultant crises. This program of pay revision to wage earners is possible only with continuous interaction and awareness of their role in the organization.
Broadbanding is a system of human resource management to administer the functions of employees of different departments under a particular appraisal system in order to facilitate easy formulation of payrolls. The salary ranges are consolidated into fewer pay ranges with higher difference between two adjacent levels of payment in this system with an intention to avoid overlap of payment ranges (p.435). This system of personnel management is beneficial to the organization as there are lots of chances of payment hikes without offers of promotion whereby expertise of the employee grows with his experience in the same field. Broadbanding may be considered to be on a competency based pay system. It alters the regular narrow salary ranges at different levels to extremely wide salary ranges for the most desirable employee. This system allows employees to choose a work of their interest and proficiency irrespective of the departments to which they are employed. Payment through broadband system ensures the participation of every employee in accomplishment of their skill set enhancement.
Under the system of competency based compensation the skill set required by the employees of different fields is framed as a combination of works from various departments. While making a slab for payment at a broadband level, highly paid employees face a probable reduction in their pay because of the stipulation of their skill