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Comprehensive study of experiments reveals some potential benefits, some possible pitfalls, and no cure-all for current problems.
Title VI of the Civil Service Reform Act of 1978 authorizes the U.S. Office of Personnel Management (OPM) to grant statutory waivers to agencies to test alternative personnel systems through demonstration projects. Since 1980, a number of federal agencies have experimented with alternative human resource management systems, including broad-banding. Also referred to as pay-banding or grade-banding, broad-banding involves the consolidation of two or more pay grades into one band or pay range. This approach could reduce 15 grade levels in the federal government into 4 or 5 pay bands. In addition to the demonstration projects, several federal agencies exempt from personnel laws contained in title 5 U.S. Code have also implemented this approach, including the General Accounting Office (GAO) and the nonappropriated fund (NAF) installations of the Department of Defense (DOD).
Popular in the Private Sector
In the private sector, the concept of broad-banding is increasingly popular. A 1992 survey by Hewitt Associates (Hewitt) documents the growing number of major corporations implementing broad-banding to facilitate job transfers and lateral job mobility, key flexibilities given the trend toward flatter organizations with limited opportunities for promotions.(1) Broad-banding reduces the need for formal promotions, permits more flexibility in career ladders, and lowers the emphasis on grade levels as the means to increase salary. Hewitt also points out, however, that broad-banding can significantly increase payroll costs and requires an effective performance management system to control progression through the bands.
In the Federal Government
Broad-banding, as applied in the federal sector, affects three related personnel management functions: job classification, compensation, and performance management. While broad-banding simplifies classification and facilitates delegation of authority to managers, it also requires that they, like their private sector counterparts, focus on performance evaluation, which is critical for pay progression. In its 1991 report, Modernizing Federal Classification: An Opportunity for Excellence, the National Academy of Public Administration (NAPA) advocated broad-banding as an alternative to a classification and pay system reportedly viewed by federal managers as burdensome, inflexible, and time-consuming.(2)
A second major study of broad-banding was initiated by the OPM in 1992, as an evaluation of the three pay-banding experiments authorized under its demonstration project authority. The OPM study had three objectives:
* to compare and contrast the various broad-banding schemes in operation;
* to describe and summarize research findings to date on the major classification and performance management system changes associated with broad-banding; and
* to analyze the cost of broad-banding and the rates at which employees progressed through the bands.
Both longitudinal workforce data and employee attitude surveys were utilized in OPM's analysis.
Testing Customized Options
The Navy demonstration project, which pioneered …