Employee Compensation: Short Smith Manufacturing

Short Smith Manufacturing
Please read the following:
James is the newest manager to join Short Smith Manufacturing, a new and growing company that is 12 years old. The company started with three employees and now has 81. There are 10 different, hourly job titles, two salaried sales positions and four salaried managers. The current managers are Scott, Tom and Ursel. Ursel will be retiring soon and James is in training to take his place. Then there will be three managers once again.
James tells Scott: Maria, the secretary at the front desk, showed me the salary figures and records for everyone. I can't find a rationale for how people are paid at Short Smith.
Scott: No one but Maria and the three long-term managers know the pay of our employees. You have kept the information confidential, haven't you?
James: Of course. I am merely trying to learn my job. Would you describe that system for me?
Scott: I like a guy, want him to work for us, so I offer him whatever I made when I was his age. Or what Tom made, or if it is a technical job—what Ursel made at his age. James groans and holds his head.
Tom adds: For a sales job though, we talk to them. We find out what top sales people are getting from other employers. We pay Stan-the-Money-Man $15,000 each time he brings in a new customer. He's doing well on his job—hence his moniker, Tom grins. James groans and holds his stomach.
Scott counters: Well, the sales people are special cases, right? James groans and sits down.
Maria walks into the office area. Tom asks her—Maria, you took over setting starting salaries when you got here three years ago. What have you been paying new hires?
Maria: I offer what you offered the last guy in the same job. I couldn't figure out any other pattern. That's why I discussed the issue with James, hoping that he would take over issuing salaries.
James goes home that night and heads straight for the 'fridge for a cool one. He pops the tab on his Pepsi and discusses the issue with his wife, who is earning her master's in HRM from Trident.
His wife has been reading about broad banding and other pay structures and wonders if broad banding would be the answer to the current dilemma that Short Smith is currently facing.
She knows YOU are currently studying compensation issues, too, and knows you absorb concepts easily, so she asks you.
--What is broad banding? What are its benefits and drawbacks to an organization the size of Short Smith?
--Provide a private-sector (business) example: an organization with a broad banding pay system and whether or not it works for them.
--Do you recommend that Short Smith develop a broad banding system? Why or why not? If not, what type of system do you recommend?
--Provide some concluding statements on managing a change to a new pay system at Short Smith.