Riding the compensation bandwagon.

• Author: Cardillo, Robin Couch
• Position: Broadbanding - Business Talk

When you walk through your company's offices, do you notice flip charts filled with scribbles? When you meander into your cafeteria, do you see long tables with employees from all departments easily mingling at lunchtime, as opposed to small tables, where employees cluster into their cliques?

If you answered yes to either question, you're probably part of a creative organization, one that has adopted a work philosophy that looks outside the company toward the shareholder. You're also a prime candidate for broadbanding.

Just what is broadbanding? Making the news in compensation lately, it's a technique for grouping employees within broad salary ranges based on their common job characteristics. "For instance," explains Dan Gilbert, a compensation consultant at General Electric, which is considered a master of the concept, "a supervisor on a factory floor may think in a timeframe of a week, while a plant manager may think m a one- or two-year timeframe." So, for the sake of compensation, the company can "band" together all of the positions that work within similar timeframes. Characteristics, other than timeframe, that you can use to group employees are knowledge and job importance, says Gilbert.

The point is to push every employee to constantly improve, and often that means making a lateral career move. In fact, that's how the process started at GE. Managers at GE Plastics discovered their employees were rejecting moves into new areas simply because "the position level of the proposed role sent the wrong message," Gilbert explains. The new jobs didn't have the status connotation of moving up the corporate ladder. GE was convinced that this hierarchical mentality was strapping the company because good people wouldn't take jobs that were perfect for them and would help the company grow.

Today, trader CEO Jack Welch's watchful eye, GE has trimmed down to seven compensation bands, instead of the typical 15, and managers now supervise 15 or more employees, instead of three or four. All of the firm's executives are working under the broadbanding system (although GE prefers to call the new salary ranges "career bands"), and by the end of this year, 10 of GE's 12 businesses will have all of their exempt employees broadbanded. Two of the businesses have even integrated their nonexempt employees.

To ease employees into the new system, GE publishes a career band guide -- or a "create-your-job" manual, as Gilbert refers to it -- that explains the concept...