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The Pros and Cons of ‘Dry’ Promotions


The Pros and Cons of ‘Dry’ Promotions

A 2023 survey by Salary.com found that 37 percent of U.S. employers gave employees "dry" promotions in the past year - or promotions without an accompanying pay raise. This is up from 34 percent in 2022 and 32 percent in 2021.

These newly promoted workers got a title change and additional responsibilities, but no salary increase. While employers may see dry promotions as a sign that they recognize and value their employees, many employees view it differently.

Before his dry promotion to inventory manager, Jason (who asked that his last name not be used) considered himself a loyal, hard-working team player who was always willing to go the extra mile for his employer. But when he found out that his promotion did not come with a salary increase, his commitment began to wane - and within six months, he found a new job with a company that was willing to pay him what he considered fair market value for his work.

Recent data compiled by the ADP Research Institute found that an employer's strategic approach to promotions is key to employee retention. To avoid inadvertently triggering resignations among the newly promoted, the institute recommended incentivizing retention among certain groups of employees, such as those with the greatest likelihood of leaving. This includes individual contributors, such as Jason, who are promoted into their first management role, as well as lower-paid employees with newly acquired credentials that could give them the opportunity to earn a higher wage somewhere else.

"When companies offer employees no-raise promotions, they must be willing to accept that they run the risk of losing that individual if they don't feel like they are being fairly compensated for their work," said Annie Rosencrans, SHRM-SCP, director of people and culture U.S. at HiBob, an HR tech company in New York City.

"The reasons [for the promotion] matter. If the promotion is a sneaky way to get more work for the same money or it's a token gesture, it can lead to retention issues," said James Neave, head of data science at job search engine Adzuna in London. "You have to make sure that you aren't teeing your employees up to leave."

Promote the Opportunity

For many employees, a dry promotion "is better than no promotion at all because it's a resume builder that the employee can use to find a better-paying job," said Julie Jansen, a career and executive coach in Stamford, Conn. But it still creates a lot of flight risk for the company.

"Companies need to be transparent with their employees about why they aren't getting a raise. Otherwise, they risk creating a culture of distrust," said Jansen, the author of I Don't Know What I Want, But I Know It's Not This: A Step-by-Step Guide to Finding Gratifying Work (Penguin Books, 2016).

Promotions typically relate to scope of role, title and compensation, Rosencrans said. "When you take compensation out of the equation, you have to have a good reason why," she said. "If it's by necessity, explain why you can't increase their salary at this time."

The authors of the ADP study said that career development opportunities can help workers transition into their new roles and responsibilities, which could in turn increase employees' commitment to their employer.

"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," said Joe Galvin, chief research officer at Vistage Worldwide, an executive coaching and peer advisory firm in Westin, Conn. "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."

Galvin noted that early in his career, he found value in accepting a dry promotion because it gave him more decision-making power and greater access to senior management.

Such promotions "offer an opportunity for personal and professional growth. New responsibilities allow employees to develop their skill sets and learn something new," said Mary Murphy, professor of psychological and brain sciences at Indiana University and author of Cultures of Growth: How the New Science of Mindset Can Transform Individuals, Teams, and Organizations (Simon & Schuster, 2024).

But to make this kind of promotion work, the employee needs to understand how the role fits into their own long-term career plan. "If the dry promotion does not align with the employee's career goals in terms of salary or role expectations, and simply involves more work (not new and different work), then the promotion can feel disappointing," Murphy said.

On the plus side, a dry promotion "can signal an employer's commitment to the employee's growth with the organization and is usually a sign the employee is performing well," said Vanessa Matsis-McCready, associate general counsel and vice president of HR at Engage PEO, a professional employer organization headquartered in Fort Lauderdale, Fla. "Managers can use it as a springboard for a conversation about where the employee wants to be in the company."

Employers must make sure employees know they are valued and appreciated, Rosencrans said. "If you know your people and what motivates them, you can offer them something else of value such as learning and training," she said.

Going back to Jason, he had landed in a job in inventory control with an Atlanta-based manufacturing company but was never really excited about the work and talked frequently about pursuing a career in sales or marketing. Instead of promoting him into a management role he didn't want, his employer could have retained this valued employee by training him to do the kind of work that genuinely interested him.

Improving the Employee Experience

While most employees want to be paid more, compensation is not the only thing that matters to them.

"Apart from money, the No. 1 thing that encourages employees to stay is the culture of the company," Jansen said. "If you focus on improving the company culture and benefits, employees are more likely to want to stay."

Matsis-McCready encouraged senior leaders to work with HR to ensure they have robust benefits that are designed to retain people. Financial incentives such as deferred compensation, stock options and financial coaching can all be used to reduce financial stress and improve an employee's financial well-being.

Autonomy and work/life balance are also a priority for many employees. In a recent survey by Joblist.com, over one-third of employees said they'd be willing to give up some of their income for a better work/life balance.

"If you can't afford to give your employees a pay raise, look for other ways to reward them, like more paid time off or greater flexibility," Neave said.

When Jason's employer decided to build a new state-of-the-art manufacturing plant in the Atlanta suburbs, it also inadvertently added an hour to his daily commute, which turned out to be another nail in his employment coffin. Had it had the foresight to offer him the option to work remotely one or two days per week, the company might have convinced him to stay. At the very least, leaders would have sent the message that they cared about his well-being.

The Role of HR

HR has an important role in helping organizations understand the risks associated with dry promotions, such as ensuring that this compensation strategy does not increase attrition or result in "quiet quitting."

"There are a lot of risks associated with dry promotions. It's up to HR to explain the issues and the policy," Neave said. "It can be a disaster if HR is not involved in the planning and communication."

HR can use a variety of tools to gauge employee feelings about no-raise promotions (e.g., anonymous surveys, stay interviews and career conversations), then use that information to help managers understand and implement the policy.

"Employees need to understand what's in it for them. When you understand what motivates your employees, you can work with managers to curate talking points to each individual and what they care about," Rosencrans said. "It's all about creative problem solving. HR can help managers work through other ways to motivate people to help them feel valued."

Jansen encouraged HR to work closely with managers to explain the rationale and the process. "A lot of managers may not even know what their employees are making," she said. "HR needs to coach managers on the process so that employees aren't left guessing."

It also falls to HR to collect meaningful data that can be used to craft compensation strategies. HR can collect data that shows whether a dry promotion policy is helping the company or causing turnover, Matsis-McCready said. She also encouraged HR to do a strict analysis to ensure that dry promotions are not discriminatory, to avoid any potential litigation.

Experts agreed that the culture of the company and the level of trust between the employee and the manager often determines how a dry promotion will be understood and received.

But there's always a risk.

"Dry promotions (and especially repeated dry promotions) can erode trust and dampen morale among the larger team," Murphy said. "When compensation doesn't match [employee] expectations, organizational trust and commitment across the team can suffer as people worry about being undervalued or unfairly compensated."

Neave encouraged HR to work with managers to ensure that the messaging and branding around this practice remains focused and positive. "Calling it a 'dry' promotion is like referring to sushi as raw dead fish," he said.

Arlene S. Hirsch is a career counselor and author in Chicago.

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