THE

EVOLUTION
OF

SALARY
STRUCTURES
Are Broadbands a Thing of the Past?
| May 2019

BY CHERYL G. CYBULSKI, CCP, SHEILA C. SEVER, CPP, AND

GREGORY A. STOSKOPF, CCP, DELOITTE CONSULTING LLP

52
 Tota
Rewardl
Matter s
CONFER
ENCE IS
SUE

| May 2019

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 s organizations continue to evolve in today’s
ever-changing business landscape, companies are
faced with many different challenges when attract-
ing, motivating and retaining their top talent. One
such challenge that continues to be top of mind for
employers today is how to determine the appropri-
ate approach to designing and administering salary
structures throughout their organization.
WorldatWork and Deloitte Consulting LLP recently
conducted a survey of salary structure policies and
practices to find out which type of salary struc-
tures are most commonly used today and how their
attributes and application varies by industry, orga-
nizational size, and employee workforce segments.

Most
Competitive, Balanced, Market-Aligned: Range spreads of 30% to 80%, with ranges growing wider Prevalent
for higher-level jobs; midpoint progressions of 10% to 15%
Market Based
••Market-Based structures continue to be the most prevalent type of salary structure with 55%
of survey participants indicating use of this type of structure

Control and Consistency:  Typical range spreads of 20% to 40%; midpoint progressions of 5% to 10%
Traditional • Traditional structures are the next most prevalent structure at 24%
of survey respondents

Types
of Salary Market Pricing of Individual Jobs: Salary range is based on market data obtained for each
Pure Market individual job; also referred to as “job-based pay ranges”
Structures Pricing • 18% of organizations indicated using this approach to guide pay decisions for some part of
their organization; 11% of organizations reported using this approach exclusively

Structure and Progression: Typical range spreads of 20% to 40%, remaining

Step consistent for all grades; midpoint progressions of 5% to 10% with defined steps within the ranges
Structures • 7% of organizations indicated using step structures which is slightly down from the 8% who
| May 2019

reported in 2012

Flexibility and Differentiation: Typical range spreads of 80% to 200%

• The use of broadbands in organizations today is significantly lower than was reported in the
Broadband
2012 survey with 5% today versus 12% in 2012 suggesting a significant downward trend in the
prevalence of these types of structures Least
Prevalent

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SPECIFIC FINDINGS
The survey findings were organized into four topics:
types of salary structures used by organizations and
their characteristics, use of competitive positioning
percentiles, frequency of salary structure adjust-
ments and the tools used in salary structure design
and administration, the results and implications of
which are conveyed in this article (WorldatWork and
Deloitte Consulting LLP 2019). Comparisons from
the 2012 Salary Structure Policies and Practices
Survey are provided to identify shifts in trends with
common practices used by employers today.
NUMBER OF SALARY STRUCTURES:
The majority of participants surveyed (59%) high-
lighted that they have more than one salary
structure in their organization, with 70% of those
participants citing the use of five or more struc-
tures. Less than a quarter (24%) of organizations
use only one salary structure, while 17% do not use
a formal salary structure to administer pay.
TYPES OF SALARY STRUCTURES AND
THEIR CHARACTERISTICS
Market-based structures have continued their popular-
ity among survey participants (55%) and have long since
replaced traditional structures (only 24% of partici-
pants) as the most prevalent type of salary structure.
While popular in the past, the use of broadbands in
organizations today has significantly decreased (5% in
2019 vs. 12% in 2012), suggesting the use of these struc-
tures is becoming more and more rare.
In contrast to administering pay through a formal
salary structure, the pure market pricing approach
was introduced in the survey this year (also referred
to as “job-based pay ranges”), and surprisingly
about 18% of organizations indicated they use this
approach to guide pay decisions. This appears to be
more prevalent for executive-level jobs than lower
job levels, however 11% of organizations reported
using this approach exclusively.
Organizations may choose to use different types
of structures to administer pay across different

Table 1 | Type of Salary Structure by Industry (Multiple Selections Were Possible)

Market- Step Pure Market No Salary

Industry Traditional Broadbands Others
Based Structures Pricing Structure

Finance & Insurance 9% 69% 3% - 25% - 6%

Health Care & Social Assistance 31% 59% 10% 10% 14% 3% 3%

Other 30% 53% 8% 3% 25% 5% 3%

Utilities, Oil & Gas 20% 53% - 7% 40% 13% 7%

All Other Manufacturing 23% 68% 3% 23% 13% 6% -

Consulting, Professional, Scientific & 39% 33% 33% - 22% - 6%

Technical Services

Table 2 | Type of Salary Structure by Organization Size (Multiple Selections Were Possible)

Market- Step Pure Market No Salary

Organization Size Traditional Broadbands Others
Based Structures Pricing Structure
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Less than 100 employees 33% 17% 17% - - 17% 17%

101 to 999 19% 58% 2% 2% 19% 5% 2%

1,000 to 4,999 22% 58% 3% 4% 19% 10% 3%

5,000 to 19,999 29% 51% 7% 10% 28% 4% 6%

Greater than 20,000 22% 66% 7% 12% 15% 2% 5%

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 Figure 1 | If your organization has regions, workforce segments or various job levels.
employees outside of the United States, Although 82% of participants responded that
do you use one or more global structure(s)? the type of salary structure used does not vary
throughout the organization, it is not uncommon
for organizations to differentiate salary struc-
tures based on geographic region (33%) or job
level (31%).
Although there are differences in prevalence by
industry and organization size, the vast majority
of surveyed organizations are using market-based
structures. However, consulting, professional, sci-
entific and technical services industries, as well
as organizations with less than 100 employees,
appear to be the heaviest users of traditional
No salary structures (See tables 1 and 2).
44% There are several possible explanations for the
rise of market-based structures and their seemingly
universal application across different industries
and organizational sizes. By design, market-based
Yes
56% structures (typically with range spreads of 30%
to 80% and midpoint progressions of 10% to 15%)
approximate the middle half of the competitive
market with minimums falling at or just below the
25th percentile of the market and maximums fall-
ing at or just above the 75th percentile. In fact,
market-based structures are often described as
being able to provide “the best of all worlds” —
the flexibility to recognize differing market rates
of pay based on performance, skill level or market
conditions, but also a reasonable level of control
over salary costs and internal equity. In today’s

Figure 2 | Does your global structure(s) use:

Grades 73%
| May 2019

Both Bands and Grades 19%

Broadbands 8%

0% 20% 40% 60% 80%

56

business environment, a balance of flexibility and
control over salary administration is fundamental
to an organization’s compensation strategy in order
to maintain competitive salaries that attract and
retain top talent in critical areas.
Additionally, pure market pricing is likely the result
of the increasing abundance of market data which is
available, through either traditional surveys or new
methods such as crowd-sourced data, both of which
are being enabled by increasingly user-friendly
technology to harvest and analyze the data.
Conversely, the decline of broadbands is likely a
result of the desire of many organizations to have
more targeted market data and salary ranges for
specific jobs and the reality that many broadband
programs decimated career ladders — or at least
the perception of those ladders and career paths.
This is evidenced by many organizations that have
reverted to traditional or market-based salary
structures after experimenting with broadbands, as
Table 3 | What competitive percentile are midpoints tied to?
Competitive Positioning
25th 40th
Percentile Percentile Percentile
% of
Organizations
1% 0%
Figure 3 | Are midpoints tied to a competitive percentile of the market based on:
Base Salary
Total Cash Compensation 8%
Other 3%
We do not tie our structures
2%
to the competitive market
0% 20%
Summa ry of Key Findings
•• Market-based ranges continue to be the most prevalent type of salary
structure used by organizations today (55%).
•• Of those surveyed, 18% use the pure market pricing approach (also
referred to as “job-based pay ranges”) within their organization, while
11% use it exclusively to administer pay.
•• The use of broadbands is down to 5% prevalence, a significant decrease
from the 12% reported in the 2012 survey.
•• 96% of organizations reported tying midpoints to the market median.
•• 75% of participants reported they adjust their salary structures annually.
well as redefining career ladders and paths to go
along with the restored salary structures.
THE USE OF GLOBAL SALARY STRUCTURES
A majority of organizations that have employees
outside of the U.S. indicated that they use one or
more global salary structures (56%). Of these orga-
nizations, 73% use grades in their global structures,
while far fewer organizations use both bands and
grades (19%), and even fewer use broadbands alone
(8%). (See Figures 1 and 2)
Global organizations are seeing the advantages
of consistency from a decrease in administrative/
50th 60th 75th
Other
Percentile Percentile
96% 0% 1% 1%
87%
| May 2019
40% 60% 80% 100%
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 Figure 4 | Are salary ranges adjusted at a tracking costs to an increase in employee engage-
consistent frequency across your organization? ment and satisfaction as they gain internal equity
across borders. Market-based structures and
grades are typically easy to communicate to global
audiences, including both employees and third-
party organizations (unions/works councils). To
align with market-pay levels, as well as employee
No expectations, the use of market-based grades with
18% reasonable midpoint progressions can allow for
natural career growth no matter the country. As
the war for talent escalates internationally, the
work of keeping market data up to date can pay for
itself in international employee attraction, reten-
tion and engagement.

THE USE OF COMPETITIVE

POSITIONING PERCENTILES
Most organizations surveyed (87%) continue to
use base salary to link their salary structures to
Yes
82% the competitive market and 96% of organizations
reported tying their midpoints to the 50th percen-
tile of the market. That is an upward trend from
the 90% that was reported in 2012. (See Figure 3
and Table 3)
Organizations are also continuing to use a con-
sistent approach to competitive market positioning
throughout their company (80% in both the 2019
and 2012 surveys). However, it is not uncommon to

Figure 5 | How often are salary ranges adjusted?

Annually

Biennially 16%
(every 2 years)

1%
| May 2019

Semi-Annually
(twice per year)

Other 8%

0% 20% 40% 60% 80% 100%

58
Table 4 | Which of the following tools do you use to design salary structures and
administer pay?

Spreadsheet Relational Enterprise Point Solution Internally

Application Database System (e.g., salary Developed
(e.g., Microsoft Application (e.g., Oracle, structure System
Excel, (e.g., Microsoft PeopleSoft, SAP, management (e.g., custom
Tools Gnumeric, Access, Workday, etc.) tool such as designed Other
OpenOffice Filemaker, CompAnalyst, within your
Calc, etc.) OpenOffice MarketPay, organization)
Base, etc.) Workscape,
etc.)

Design Your Salary

Structures (e.g., model
new ranges, develop
86% 4% 13% 28% 7% 4%
structures, calculate
spreads and midpoint
progressions, etc.)

Administer Pay Within

the Salary Ranges (e.g.,
manage salary structures, 67% 4% 44% 18% 8% 2%
make changes to existing
structures, etc.)

allow for variation, with job function/family (45%)
and job level (29%) playing a role in determining the
targeted competitive percentile.
FREQUENCY OF SALARY STRUCTURE
ADJUSTMENTS
Organizations are continuing to adjust their salary
ranges at a consistent frequency (82%), with 75%
of organizations reporting adjustments to salary
ranges are made on an annual basis. (See Figures
4 and 5)
While most organizations reported that the
frequency of salary structure adjustments is
consistent across the organization, it is not
uncommon for adjustments to be made based on
job function/family (21%) and critical workforce
segment (19%).
TOOLS USED IN SALARY STRUCTURE
•• Administer pay within the salary ranges (for exam-
ple, managing salary structures and making
changes to existing structures);
•• Record their salary range data; and
•• C ommunicate salary ranges to internal custom-
ers (such as managers, recruiters and human
resources business partners).
The most popular tool used for salary struc-
ture design and administration continues to
be spreadsheet applications such as Microsoft
Excel. In particular, 86% of survey respondents
indicated they use spreadsheet applications for
salary structure design and 67% use spread-
sheets to administer pay. Other common options
for designing salary structures were point solu-
tions such as PayFactors and MarketPay (28%) or
enterprise systems such as Workday and Oracle
for administering pay (44%). (See Table 4)
| May 2019

DESIGN AND ADMINISTRATION For salary structure record keeping and commu-
The survey asked respondents about the types of nication, spreadsheet applications remained the
tools they use to: most common tool used (64%). However, other
•• D esign structures (such as model new prevalent tools for communicating salary ranges
ranges, develop structures, calculate included email (38%) and enterprise systems
spreads and midpoint progressions); (34%). (See Figure 6)
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 CONCLUSION
In 2012, it appeared organizations were gravitating
toward market-based structures and decreasing
the use of broadbands. This trend has been sup-
ported by the 2019 survey results which show that
market-based structures are still the most preva-
lent type of structures, and broadbands are indeed
losing ground.
The differences in acceptance of the various
salary structure types between industries and
populations should not be ignored. Production
and heavily unionized environments may still favor
step or traditional structures, as they meet the
needs of those populations. Utilities and oil and
gas industry companies show heavy use of pure
market pricing (or job-based ranges).
Internal equity is also an important consider-
ation, and the authors encourage organizations to
make that an active choice that is revisited every
Figure 6 | What type of systems/tools do you currently use to communicate salary ranges to
internal customers? (e.g., managers, recruiters, HR business partners, etc.)
Spreadsheet application (e.g.,Microsoft Excel,
Gnumeric, OpenOffice Calc, etc.)
Email
Enterprise System
(e.g., Oracle, PeopleSoft, SAP, Workday, etc.)
Company Intranet
Internally Developed System
(e.g., custom designed within your organization
| May 2019
Other
Point Solution
(e.g., salary structure management tool such as
CompAnalyst, MarketPay, Workscape, etc.)
0%
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few years, especially as organizations continue to
globalize and international locations gain more
visibility into each other. Does the organization
want to reward people equally across countries
for delivering the same internal value? Or should
an employee’s compensation be solely based on
the marketplace in which the employee works?
Within an increasingly competitive environment
for talent, organizations may continue to look
to market-based ranges or a pure market pric-
ing approach to continue to balance their need
for flexibility and control when considering their
structure design or even when modifying other
types of structures to fit this need. As organiza-
tions become more global in nature, it will likely
be important to assess the appropriate salary
structure design for a multinational organization.
Also, as new technologies continue to emerge,
there may be a shift toward more specialized or
64%
38%
34%
21%
8%
7%
5%
20% 40% 60% 80% 100%

sophisticated approaches in the future, based on
the growing ease of administering and tracking
larger amounts of market data
As the evolution of salary structures continues,
will organizations regress into more restrictive tra-
ditional grades, driven by a need for cost control,
or will they progress into a balance of control and
discretion, which is held equally at global and local
levels? Will pure market pricing continue to grow
as the availability of market data increases? When
facing the consistent challenges of attraction, reten-
tion and engagement, and as innovations and new
technologies emerge, it is important to remem-
ber that necessity — along with creative rewards
professionals and increasingly available data and
technology — is often the mother of invention.
Survey Ba ckground
Deloitte Consulting LLP and WorldatWork surveyed more than 330 Worl-
datWork members and nonmembers to gather information about salary
structure policies and practices in Fall 2018. The focus of the research
was to gain a better understanding of the types of salary structures, com-
petitive positioning, common policies and practices, and the tools that
organizations use to design and administer salary structures today.
The demographics of the survey sample and the respondents are similar
to the WorldatWork membership as a whole. The typical WorldatWork
member works at the managerial level or higher in the headquarters of a
large organization in North America.
Cheryl G. Cybulski, CCP, is a senior consultant in the compensation
strategies practice at Deloitte Consulting LLP in Los Angeles. She can
be reached at ccybulski@deloitte.com.
Sheila C. Sever, CPP, is a senior manager in the compensation strat-
egies practice at Deloitte Consulting LLP in Houston. She can be
reached at ssever@deloitte.com.
Gregory A. Stoskopf, CCP, is a managing director and the national
compensations trategies practice leader at Deloitte Consulting LLP in
New York. He can be reached at gstoskopf@deloitte.com.
| May 2019
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