HRM reform in the UN broadbanding:

An idea whose time has passed

Maria Dweggah, FICSA

Since 2000, the ICSC, upon the request of the General Assembly and with support from the administrations of the UN organizations and specialized agencies, has been reviewing the pay and benefits system within the context of the overall HRM reform in the UN system. The fundamental principle which has guided the work is that a “modernized system would improve organizational performance by linking pay to performance, reward staff in a competitive and equitable manner on the basis of merit, competence, performance and accountability; motivate and encourage staff to develop needed skills and competitiveness to meet the changing needs of the organizations’ programmes; and to provide opportunities for dynamic career advancement in a wider professional context” (ICSC/56/R.3)

In order to test the link of pay to performance, a broad banded salary structure model is being proposed for a pilot study. Organizations have been asked to volunteer.

Band 1 P-1, P-2
Band 2 P-3, P-4, P-5
Band 3 D-1, D-2

Key to being accepted to participate in the study is a reliable and credible performance appraisal system. It is the absolute necessity. The PAS would need to be able to evaluate performance, competency development and client feedback. To date, we are not aware of any organizations which have confirmed participation in the study. It is likely that by the summer session of the ICSC, which will take place in New York on 14-25 July 2003, there may be a few volunteers. But whether they pass the PAS/litmus test is questionable. The ICSC documents can be viewed at: http://icsc.un.org

Before any organization moves forward, or before staff accept such a move, it would be worthwhile for them to take a look at the experience of one international organization. The World Bank undertook broadbanding five years ago. Though not an organization of the UN organization system, the Bank is often touted as the quintessence of “best practice”. Let’s read what the staff of the WB have to say. This article is taken from the May Newsletter of the World Bank Group Staff Association, who has kindly given UN Special permission to reprint: “It’s interesting today, five years later, to look at the reasons why the Bank undertook broadbanding in the first place. To some extent, it was what one compensation consultant calls “a fad du jour.” The Bank did have some legitimate salary-setting problems before, according to Chris Parel, who served on the SA’s Compensation Working Group at the time. It was becoming harder to find jobs on the market that corresponded to all the grades. The Hay points system— which based salary on level of responsibility —was becoming thinner and offering fewer comparators.

What’s unclear is that broadbanding represented a solution.

It’s important also to look at the times. In 1998, there was strong pressure on companies to out-perform their competitors and keep stock prices spiraling up. In personnel matters, that translated into pushing performance among employees — and broadbanding was seen as a way to do that, because of hierarchical [...] through the whole broadbanding exercise.

Broadbanding also went well with the fashionable emphasis on teamwork, and the equally fashionable disparagement of hierarchy. Something hierarchical was said to be negative—on the face of it, without any real thought. In actual fact, the Bank’s senior management structure has remained hierarchical through the whole broadbanding exercise.

Paul Dorf, managing director of Compensation Resources, Inc., in New Jersey, says “Most companies that adopted broadbanding have found that it’s not as effective as they thought it would be. Over the last decade we have seen a lot of companies that have moved away from it.” He notes that broadbanding works well only if competencies like those at IFC are developed. “They must be exceptionally detailed to work,” he adds.

Another problem is that real broad- banding—where managers do have the resources to reward staff incrementally for greater experience and expertise— can get quite expensive. Ironically, at the Bank, management tried simultaneously to introduce broadbanding and to reduce budgets —a sure recipe for problems.

Specialists estimate that between 15 and 20 percent of companies elected broadbanding during the heyday of the practice. As recently as late April, the Washington Post carried a story about a U.S. federal agency possibly converting to broadbanding—the Pentagon. Bank staff might tell Defense Secretary Donald Rumsfeld to slow down in his rush to change.

Even the rhetoric being used to sell broadbanding at the Pentagon will sound familiar to Bank staff, because it devolves into almost nothing substantive. Post writer Christopher Lee reports that “Pentagon officials said the changes are necessary to shape the Defense Department into a modern, responsible bureaucracy capable of efficiently carrying out the government’s … mission…. ‘We’re trying to create a system in which people can think in one cohesive unit, then act,’ said David S. Chu, undersecretary of defense for personnel.…‘The current civil service system is rigid. It is not agile. We cannot succeed with the current system.’” A reality check of the promises made for broadbanding— that it will be “modern,” “responsible,” “efficient,” “agile,” and cause staff to “think in one unit,”—reveals that, though the claims sound good initially, they actually say nothing concrete.”