The fact that so many organizations

The fact that so many organizations are embracing broad banding to design their pay structures is reflective of changes in the nature of work. Because of the democratization of information produced by the Internet, workers can gather data about what other organizations are paying employees with similar skills and experience. Those workers who believe that they are underpaid can try to find work elsewhere. Organizations cannot afford to lose their most competent workers, and having a pay structure based on broad banding allows salary increases for individuals based on merit that do not require a change in job classification or even job title. In addition, organizations are becoming flatter and less hierarchical, and broad banding reflects these organizational changes. Because of this, the IPD report concluded that “whatever the many forms broad banding takes, it seems to be here to stay.”

So far, this chapter has discussed the relationship between performance management and reward systems. Next, we turn to a different topic: the relationship between performance management and the law.