Alexis Kayser (Email) – Friday, December 15th, 2023
All promotions are not created equally — and if leaders do not handle them appropriately, they could have a negative effect on employee retention, according to a Dec. 7 article in SHRM.
The article references a 2023 survey by salary.com that found that 37% of U.S. employers gave employees “dry promotions” — those that include a title change and more responsibilities but no raise — in the previous 12 months.
Dry promotions in 2023 increased 3 points from 2022 and 5 points from 2021, according to the survey.
These promotions can be “better than no promotion at all because it’s a resume builder that the employee can use to find a better-paying job,” Julie Jansen, a career and executive coach in Stamford, Conn., told SHRM. But employers need to be transparent about why the increased responsibilities do not come with a raise, or they risk creating a culture of distrust, the article said.
A dry promotion might be perceived as positive if the employee deserves recognition and is receptive to the unpaid perks that accompany a new title, such as more decision-making power and increased access to senior leadership. However, some employees might feel they are being compensated unfairly for their heightened workload and could seek better pay elsewhere; in September, The Wall Street Journal reported that 29% of people left their employer within a month of receiving their first promotion.
“When offering an employee a no-raise promotion, companies need to think about how to use it effectively as a tactic and as part of their compensation strategy,” Joe Galvin, chief research officer at Vistage, an executive coaching and peer advisory firm in Westin, Conn., told SHRM. “It needs to be positioned as a form of recognition and reward that will lead to further career advancement. It can go sideways when it feels patronizing.”
SHRM recommends that HR leaders use anonymous surveys, stay interviews and career conversations to gauge employees’ feelings about no-raise promotions.
“There are a lot of risks associated with dry promotions. It’s up to HR to explain the issues and the policy,” said James Neave, head of data science at job search engine Adzuna in London. “It can be a disaster if HR is not involved in the planning and communication.”