Pay-Banding Can Help Align Pay with New Organizational Structures: OF BANDS AND TITLES BARRIERS TO HIERARCHY LAYING ALTERNATIVE-CAREER TRACKS THE PAY DELIVERY PAYOFF BRINGING JOB EVALUATION UP TO SPEED THE GOOD--AND BAD--OF BANDING

• Published in: National Productivity Review (1986-1998) 1992-07, Vol.11 (3), p.317
• Main Author: LeBlanc, Peter V
• Format: Article
• Language: English
• Subjects: Careers; Compensation; Cooperation; Employees; Employment; Flexibility; Job design; Pay structure; Productivity; Task forces; Teams; Teamwork; Wages & salaries
• ISSN: 0277-8556; 1520-6734

Improvements in productivity and quality are being attributed to employee involvement and work teams. Yet, many firms discover that changes in participation and work design lead to questions about pay system alignment. Some organizations have found it necessary to abandon the standard pay structure and begin anew. Northern Telecom placed fiftythousand worldwide employees into bands in January 1991. The project involved three years of study and one year of implementation. After eighteen months of experience in the banding structure, Northern Telecom has realized a greater level of organizational flexibility and few, if any, negative effects. Most important, employees have accepted the all-new pay and career growth systems, even though the frequency and type of promotions have significantly decreased. Could this case, which is consistent with experiences reported at other firms that have gone to banding, indicate a change in employee values and aspirations? Are employees more willing than conventionally thought to get off the fast-track and obtain broader knowledge and skills within the same level? The key features, implications, advantages, and disadvantages of banding are presented in this article. It may be that banding is the right pay structure for the needs of both employers and employees in the 1990s.