The Advantage and Disadvantages of Broad Banding - Assignment Example

• Some businesses try to encourage horizontal movement, information sharing and multiskilling through the implementation of ‘broadbanded’ pay structures. Discuss the advantage and disadvantages of broadbanding in comparison to hierarchical graded pay structures.

In the broadly banded pay structures, the pay range in the band is much higher compared to conventional grade structure. The width of the band can be 100% or even higher sometimes the structure consisting of four or five bands. The advantages of broad banding structures include the following;

Helps in streamlining the hierarchy

Organizations sometimes become too much hierarchical for the company’s strategic direction; making it experience slow reaction, which takes a lot of time getting information from the top of the organisation to down and also less efficient passing messages from lower level personnel to senior managers (Hallock, 2012). Broad banding is the best way of face saving for businesses to be able to collapse the salaries ranges and provide support de-layering which helps in flattening the structure of an organisation and reducing hierarchy.

Facilitating internal movement

Broad banding in an organisation facilitates more movements internally since the probability raises that a person’s current job, as well as alternative positions, are maintained within a similar wider pay range. Which considers other position attributes other than pay, encourages internal mobility as well as facilitating greater development assignments.

Brings forth more trust in the management

Broad banding helps managers to have more latitude to paying only what they see fit to their employees. Which greatly reduces the push and pull between the firms hiring managers and the organisation’s human resources. Making the pay issue to shift to hiring manager control as well as the pay challenges. Human resources were perceived as the regulatory gate keeper in preserving salary structured is diminished. Organizations managers through the application of broadly banded pay structures are entrusted with more autonomy (Hallock, 2012).

Broad banding pay structures have the following disadvantages:

Non-awareness of the external market rates

When using broad banding and say a manager wants to make payments at the midpoint of the market managers end up baffled and unsure this is because broad banding has no midpoint hence the tool of comp-ratio cannot be applied in broad banding (Hallock, 2012).

Likelihood of inequities

There is no warranty with regards to the flexibility and trust of broad banding in management. Broad band structures weaken the link between the growth of salary and development of skills for higher levels given that it cannot be used as motivators.

Lacking costs control

It might be questionable to having salary bands given that they are very wide. One needs to evaluate the training and measures of other cost control to find out if they have the strength to facilitate handing managers with considerable autonomy and authority (Hallock, 2012). Implementing broad banding requires one to critically think of other incentives which were previously tied to pay grades like bonuses.

Promotions

By implementing broad band pay structures, they result to lack of promotions in an organisation given that fewer salary bands result to fewer opportunities climbing an organization's ladder.

When it comes to deciding to whether to implement broad banding as a payment tool in an organisation greatly depends on the management decisions. Broad banding can be the most useful tool for reducing salary grades as well as classifying jobs, but it has its drawbacks too (Hallock, 2012).

• Critically discuss the statement; ‘reward systems on their own do little to improve employee’s performance without HR practices that generate ‘intrinsic’ motivation’.

A majority of organisation's and company’s managers and CEOs are angry because even when they spend so much money on rewarding employees, they still cannot see any measurable impact. In most cases, it is the same managers and CEOs who do not practice reward strategy basing on long time research and surveys which are dedicated to studying the behaviour of people, motivation as well as human reinforcement. Numerous researchers discovered that with regards to employees rewarding system higher pay is not always best, money may not always be the better option hence reward timing might be more vital than the reward value (Kerr, 2008).

An efficient system of rewarding employees has a great and significant effect on work performance. Employee reward system increases the work performance. Reward system greatly motivates employees to increase the quality of their work as well as the quantity and alignment of the employee's performance along with the objectives and aims of the organisation. Hence reward systems can have great influence on the behaviour of employees, motivating employees as well as their performance which makes it the most integral component in any vital strategy of the organisation (Kerr, 2008). Therefore it should be noted that reward system alone cannot efficiently improve employee performance but instead it requires other human resource practices that motivate employees and when employees are motivated to work their performance significantly improves which in turn increases the company’s productivity and more profits.

• Present evidence for and against using job evaluation as a method of determining levels of pays. To what extent might job evaluation introduce elements of discrimination?

Job evaluation refers to the systematic manner of determining the job value or job worth relative to another kind of jobs in a company. Its aim is assessing the job’s relative worth to establish a pay structure rationally. Some job evaluation techniques include job ranking, points factor comparison and the whole job classification. They determine employees pay levels given that they are means of conducting job evaluation. Job evaluation has the following merits to an organisation:

Job evaluation always tries to link the levels of pay with job requirements. Job evaluation helps in offering systematic procedures to determine the relative job worth. One of the natural results of job evaluation is the equitable structure of wage. When a job evaluation is not biased, it helps eliminate the inequalities of salary through jobs placement whereby jobs with same requirements are placed in the same salary ranking (Armstrong et al., 2005).

With job evaluation, both an organisation’s employees as well as unions can freely participate in job evaluation committee as members. Also when a job evaluation is done properly and carefully is helps in new jobs evaluation. Lastly, job evaluation brings out any possibilities of the appropriate usage of a company’s labour force by showing those jobs that require workers who are more or less skilled compared to current workers.

On the other hand job evaluation faces several limitations including the following;

Job evaluation is not entirely scientific. Most of the job evaluation techniques tend to be difficult for people to understand them including the company’s supervisors. Also, job evaluation faces wide fluctuations in factors of compensation with regards to technological changes as well as changes in values and employers aspirations (Armstrong et al., 2005). Lastly but not least, in job evaluation employees, leaders of trade unions, managers and operators of such programmes might end up assigning various weight to different factors which could end up creating dispute grounds in an organisation. It is possible that during job evaluation one could experience an element of discrimination especially when applying the different techniques of job evaluation which could require one to introduce some discrimination on the employee.

• Define ‘new pay’ and present evidence for and against its use with contemporary organisations, include different industries and product markets in your answers.

New pay refers to when the programs of pay of an organisation mostly react to specified challenges of both human resource and the business; it requires an organisation to use all communication possibilities to connect with the right performance targets which consist of base pay, indirect pay, perks pay, variable pay extra. The main component of new pay is the variable pay which aids in facilitating the partnership between the employee and the organisation by positively linking both parties’ fortunes. According to new pay, compensation should be perceived as a total package (Brook, 2013).

Some of the evidence for new pay include; new pay helps different industries to only reward those employees whose perform best. With new pay, for instance, variable pay helps employees in various industries to achieve work targets which they defined by providing them with incentives directly. With new pay, managers of different organisations and companies in product markets can use defined framework to set goals and objectives which is expected to improve employees performance as well as their productivity (Brook, 2013). New pay helps employees to be able to focus on things which are urgent and need more improving when they have a direct link to pay.

Pay systems like new pay can de-motivate employees especially when unachievable goals are set. Also, new pay when applied to different industries could hinder an organisations team spirit as well as that of an organisation. New pay can also affect the product markets especially when employees do not agree with the terms and payment systems which could lead them to go around painting a bad picture of an organisation’s product (Nakajima, 2011). New pay also reduces the equity pay which could make an organisation liable to the challenges of equal costly pay if the operation is not conducted fairly hence a company should first compare different industries especially those practising new pay as the reward system.

• Critically evaluate the following statement; ‘performance Related Pay (PRP) schemes are effective in sustaining organisational performance’. Use industry examples in your answer

With time many companies and organisation in different industries have moved with others in the process of moving towards giving employees rewards for their performance in order to achieve the goals of the organisation. Essentially making they connect compensation with performance. Therefore, financial remuneration effectiveness on employee performance since performance and motivation have many factors affecting them which makes connecting PRP to an organisation’s or employees performance more harder (Mullins, 2004). In order for PRP to be used effectively, companies and organisations are expected to reflect on situations which can potentially enhance motivation on employees and improve organisation’s productivity. PRP is appropriate in the sales staff roles. PRP pressurises company managers to ensure performance is well managed and assessed whereby given that PRP fails it is usually due to implementing and operating the scheme and not its design. Performance effectiveness depends on the clarity of the company’s objectives, the level of transparency, having the best communications, having the most efficient system for performance management and offering training especially to general and line managers. According to CIPD many of line managers do not possess the skills and competency to managing performance. Managers should be competent in order to be able to differentiate in accordance with each employee’s performance. Companies should, therefore, manage PRP properly with a view of promoting employee performance effectively hence the need for organisation’s managers to ensure that they fully involved in implementation of PRP schemes at every stage to ensure that effective performance is monitored and maintained.

• Critically evaluate the arguments for and against the National Minimum Wage using evidence to support your answer.

Labour supply is elastic hence it can easily be moved across a region with wage remaining constant. In UK national minimum wage was made lawful since the year 1999 when the adult wage was at 3.6 Euro per hour. By the year 2015, the UK under the age of 18 minimum wage rose from the 3.00 Euro in 2000 to 3.87 Euro. Minimum wage ensures equity justification by making sure that every job offers fair pay rates consumerizing with the employee's skills and experience. National minimum wage also plays a great role in fighting against labour market discrimination whereby it is designed to aid in offsetting the effects that come with persistent discrimination of the low paid workers mainly female and young employees. It also offers labour market incentives whereby is it made to improve new employee’s incentives.

National minimum wage has its disadvantages including competitiveness and jobs and its effect on poverty relatively. Minimum wage may lead to losing jobs since when labour cost rises it makes it very costly for employers to employ more workers. Minimum wage has proven to tend to boost middle-class households level incomes those with a member working and possess a significant risk to those households with the parent not working in the case of families with single parents (Bob, 2001).