Which pay structure usually restricts the movement of employees among pay grades?

The choice of traditional pay grades accurately reflects a pay structure that typically restricts the movement of employees among pay grades. In this framework, pay grades are well-defined levels that correspond to specific salary ranges. Each pay grade is generally aligned with a certain level of job complexity, responsibility, and market rate for the role.

Employees usually find that advancement requires either a formal promotion or the attainment of new skills or qualifications that justify a transition to a higher pay grade. This can create a more structured environment regarding compensation but can sometimes limit lateral movements or upward mobility for employees whose roles might not require a significant step up in complexity or responsibility but still desire a change.

In contrast, broadbanding allows for a more flexible salary structure that can accommodate broader roles and responsibilities, thereby promoting easier movement within the same band. Market-based pay is focused on setting salaries according to market rates rather than tightly structured pay grades. Skill-based pay incentivizes employees to acquire additional skills, which can lead to greater movement opportunities within the organization.