Society For Human Resource Management (SHRM) Certified Professional Practice Exam

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Study for the SHRM Certified Professional Exam with flashcards and multiple choice questions. Each question includes hints and explanations to help you understand key HR concepts. Prepare for your certification with confidence!

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Which type of pay structure encourages skill development while limiting promotions?

Hays structure
Pay classification
Flex pay
Broadbanding

The correct answer is: Broadbanding

Broadbanding is a type of pay structure that consolidates a wide range of pay grades into fewer broad bands. This approach has the dual effect of simplifying the pay system and supporting skill development. By focusing on skill sets and competencies rather than strict job titles or rigid grade levels, broadbanding allows employees to enhance their skills and responsibilities within a wider range of roles. This structure limits the number of promotions since there are fewer distinct levels within the organization. Employees can progress within their band through skill development and increased competencies instead of moving up through numerous promotional levels. Consequently, broadbanding encourages continuous learning and skill acquisition while reducing the emphasis on traditional hierarchical advancement. This model fits organizations looking to foster a culture of skill development without creating too many levels of promotion, thereby allowing for a more flexible approach to employee growth and compensation.