Topics. What is Broadbanding? Career-banding. A Competency Based Human Resources Classification and Compensation System

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Beatrice Cain
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1 Career-banding A Competency Based Human Resources Classification and Compensation System Presented by: State of North Carolina, Office of State Personnel Fox Lawson & Associates, LLC 1 Topics What is broadbanding? Background Banding is organizational change The starting point Banding vs. the traditional model Implications for public pay programs 2 What is Broadbanding? It means different things to different people. Banding is: Reduced number of salary grades and ranges Widened salary ranges It represents a dramatic change in salary management. 3 1

2 Background Navy developed concept in 1980 Emerged in private sector in early 1990s Current popularity due to increased flexibility Broadbanding experience is still developing Currently installed in about 15% of government organizations More popular among professional and managerial classes Less popular among labor/trades, clerical, public safety 4 Banding is Organizational Change It broadens the view of jobs and of work. It enlarges the scope of a manager s job. It facilitates reorganization and change. 5 The Starting Point A Traditional Salary Structure Most salary structures are based on the same principles Salaries are managed within ranges using a merit policy or step increases A traditional structure was designed to maintain control 6 2

3 Broadband Example $ III IV Low I Job Value II 12 Grades Four Broadbands High High 7 Implications for Public Pay Programs Is banding consistent with shared compensation beliefs? Are managers ready for an expanded role? How will employees (and their union representatives) react to banding? 8 Topics Reasons to move to broadbanding Cost management Administrative resources Culture of the organization Restructuring the organization Job titles Merit pay Career management Teams 9 3

4 Reasons to Move to Broadbanding Enhanced flexibility including starting pay rates Less bureaucratic Reduces administrative resources Reduces emphasis on job hierarchy (class consolidation) Can delegate accountability for people management to managers Facilitates lateral career movement Supports effective team work 10 Banding vs. the Traditional Model How will the day-to-day management of salaries change? What do we need to do differently? Do we need new policies? New salary management tools? 11 Cost Management De-emphasizes rigid pay increase policies De-emphasizes games to justify pay increases Opens door to control through payroll management 12 4

5 Administrative Resources Fewer grade (now band) change decisions means less staff time Within band pay adjustments handled by managers Reduced emphasis on job value measurement 13 Culture of the Organization From close centralized control to looser local management From a rigid hierarchy to a flatter organization with fewer status distinctions From a time-in-grade, mechanistic view of jobs and workers to a more flexible and open view of individual contribution 14 Restructuring the Organization Expedites restructuring Facilitates delayering De-emphasizes structural differences 15 5

6 Job Titles Facilitates the reduction of job titles / classes Minor job differences less important Generic titles enhance flexibility of program 16 Job Titles Facilitates the reduction of job titles / classes Minor job differences less important Generic titles enhance flexibility of program 17 Career Management Banding reduces promotional opportunities Reduces emphasis on upward job movement to secure higher pay Banding facilitates lateral job movement Can shift emphasis to individual development 18 6

7 Career-banding is a simpler classification and compensation system which: collapses similar graded classes into more generic titles; has wider pay ranges; allows pay movement based on the development and demonstration of competencies (knowledges, skills and abilities); and emphasizes career development. 19 Collapsing of similar job classes into more generic titles: Legal Branch - collapsed 32 graded classes into 5 banded classes. Office Support Branch - collapsed 104 graded classes into 4 banded classes. Institutional Services - collapsed 85 graded classes into 6 banded classes. Nursing Branch - collapsed 72 graded classes into 6 banded classes. 20 Examples of classes moved from Graded to Banded System Current Class Title Paralegal I Paralegal II Paralegal III Banded Title Paralegal Accounting Technician I Accounting Technician II Accounting Technician III Accounting Technician IV Accounting Technician V Accounting Technician 21 7

8 Example of wider pay ranges: Current Class Title and Grade: Banded Title and Range: Grade 65 $30,522 - $47,971 University Administrative Manager I Grade 72 $ $65,566 Administrative Officer III Grade 77 $49,577 - $82,424 Business Officer III Business Officer - $30,522- $83, What are Competencies? Set of knowledge, skills and abilities DEMONSTRATED ON THE JOB. Their attainment and demonstration on the job increases the potential level of work for an employee. An increase in competencies which are needed by the organization, applied on the job, and necessitated by job change can be used as a basis for an increase in pay Competencies needed for, and demonstrated on the job determines pay, rather than years of service. 23 Career-banding Philosophy: To positively impact the state s ability to: recruit, retain, and develop a qualified, motivated, and diverse workforce; emphasize competencies and demonstrated proficiency on the job; and promote career development. 24 8

9 Why Change? Current Classification System developed in 1949 has not kept current with changes in technology or how we do business. Current system had grown to more than 6,000 classes. Employee pay within the salary range is not always managed well in the current system. Managers feel that they have little involvement in classification and pay determination. 25 Why Change? Employees believe their work competencies are not rewarded. Pay policies and rules are too restrictive. Current budgets do not support the pay policies and rules of the graded system. Too much time is spent on classifying jobs with too much emphasis on pay grades. Current graded system is not focused on paying employees based on market information and their job contribution. Current graded system does not encourage employees to develop those skills necessary for the organization to succeed. 26 As a Classification and Compensation System, Careerbanding: significantly reduces the number of classification titles; has fewer policies and rules; bases employee pay on labor market information and demonstrated competency level; and enables better competition for talent. 27 9

10 As a Classification and Compensation System, Careerbanding: encourages employees to improve their skills and plan their careers; encourages managers to be involved in the classification and compensation process; facilitates the hiring of new employees who have the necessary competencies needed to do the work; and focuses more on career development activities. 28 Job Family Structure: 1. Administrative and Managerial 2. Information Technology 3. Law Enforcement and Public Safety 4. Information and Education 5. Human Services 6. Medical and Health 7. Institutional Services 8. Operations and Skilled Trades 9. Engineering and Architecture 10. Natural Resources and Scientific 29 Job Family Structure Job Family Administrative and Managerial Branch Fiscal Banded Class Accounting Technician Banded Class Accountant Banded Class Accounting Manager 30 10

11 Each banded class has three levels with points of pay: Contributing: knowledge, skills and abilities minimally necessary to perform work in a banded class from entry up to journey Journey: fully applied body of knowledge, skills and abilities required for a banded class Advanced: the highest or broadest scope of knowledge skills and abilities required in the banded class 31 Pay Factors: Financial Resources The amount of funding that a manager has available when making pay decisions. Appropriate Market Rate The market rate applicable to the competencies demonstrated by the employee. Internal Pay Alignment The consistent alignment of salaries for employees who demonstrate similar required competencies in the same banded class within a work unit or organization. Required Competencies The competencies and associated levels that are required based on organizational business need and demonstrated on the job. 32 Min Contributing Reference Rate Pay Based on Competencies Competency Assessment Form Contributing Journey Advanced Comp A X Comp B X Comp C X Overall X Employee s Pay Journey Market Rate Career-Banded Class Rates Advanced Reference Rate 33 Max 11

12 Min Pay Based on Competencies Contributing Journey Advanced Comp A X Comp B X Comp C X Overall X Contributing Reference Rate Competency Assessment Form Employee s Pay Journey Market Rate Career-Banded Class Rates Advanced Reference Rate 34 Max Min Pay Based on Competencies Contributing Journey Advanced Comp A X Comp B X Comp C X Overall X Contributing Reference Rate Competency Assessment Form Employee s Pay Journey Market Rate Career-Banded Class Rates Advanced Reference Rate Max 35 What has been banded? Information Technology and Public Safety classes were banded statewide first. Several banded classes have been implemented in various Agencies/Universities: Administrative Support, Facility Maintenance, Institutional Services, Legal, Research, Social Research and Vehicle/Equipment Operation. Based on current legislation, banded classifications have been developed by 6/2008 for all University positions governed by the State Personnel Act. Banded classifications have also been developed for all Agency and University positions in Engineering, Fiscal, Library, Nursing and Pharmacy

13 Funding? Cost neutral on implementation: Current positions are moved into the banded class based on the crosswalk. Employee competencies are assessed against the business need of the position; pay changes may be made at this time. Some graded classes are close to market. Funded through redistribution of promotion, reallocation, in-range and other increases currently being awarded in the graded system. Legislative salary adjustment fund request, if applicable. 37 Good for Employees: Take a greater personal responsibility for career management. Develop competencies and skills that are valued by the organization. Contribute to the accomplishment of the organization s mission through continued demonstration of competencies. Rewards for competencies developed and demonstrated on the job. Better opportunity to develop a career path within state government. 38 Good for Managers: Workforce planning to suit business needs. Targeted competencies when recruiting and staffing. Ability to better plan for training needs. Budget planning is based on real market data. Employees paid above/below market are obvious. Compensation decisions are based on employees relative market value. With oversight from human resources, involved in career development of employees and pay decisions. Focus on appropriate pay versus justifying a classification level

Compensation Network October 13, 2011

Compensation Network October 13, 2011 Classification System developed in 1949 was not kept current with changes in technology or how we do business System had grown to more than 6,000 classes Employee