The Rise of the Dry Promotion - HRPA (2024)

Promotions are traditionally a cause for celebration as it likely means a new job title, increased responsibilities and a raise. But what happens when the title and tasks change, but the salary remains the same?

Potential Consequences

Promotions, including “dry ones”, can offer a wealth of benefits. They provide employees with the chance to enhance their knowledge and skills, broaden their networks, refine their capabilities and boost a sense of value and pride.

But the thrill of a new job title can quickly sour if promotions do not come with a salary increase, creating a breeding ground for dissatisfaction, resentment and a decline in morale among some employees. Research from SHRM in 2023 indicated that 72% of employees experience diminished motivation when they perceive their compensation as unjust. For employers, this may result in lower engagement levels and diminished performance. It can also lead to higher turnover rates, as research shows that 29% of employees leave within a month of being promoted without a financial incentive. This ultimately impacts the organization’s performance and its ability to reach its goals.

Dry promotions could also tarnish your company’s reputation. Imagine yourself as a highly sought-after professional searching for a new job. You check out a company’s reviews and come across numerous negative comments from former employees warning potential employees about an excessive workload with inadequate compensation. One study showed that 55% of job seekers refrain from applying to a position with unfavorable online reviews. To safeguard your potential hires from falling into this category, it is essential to approach dry promotions with caution.

Optimizing the Dry Promotion (When It’s Inevitable)

All that said, sometimes dry promotions are an unavoidable reality and a strategic necessity. So, here are some key tips HR can use to ensure dry promotions are done the right way.

1. Be transparent. Clearly explain to employees the reasons behind not receiving a raise alongside the promotion. If budget limitations are a factor, openly address the potential timeline for when this situation could improve, or if it may remain unchanged. This level of open communication is pivotal in nurturing a culture of trust among employers and employees.
   
2. Provide a clear roadmap. Help employees visualize how their evolving role connects with their future career goals. Show them how this promotion is not just a step up in their current position, but a strategic move that aligns with their long-term aspirations.
   
3. Think beyond cash. Salary is just one piece of the puzzle when it comes to an employee’s overall compensation package. Even if a raise isn’t possible now, there are alternative ways to ensure an employees’ role is more fulfilling. Consider options such as increased vacation time, flexible work arrangements, or additional perks. Prioritize the creation of a work environment that promotes a healthy work-life balance. Encourage continuous learning and professional development to support career advancement. Delve into enhanced benefits including stock options or profit sharing to sweeten the compensation package when a salary increase isn’t immediately possible.
   
4. Document the agreement: If future pay increases are a possibility, formalize this commitment. Create a detailed agreement outlining when the employee’s compensation will be reassessed – and make sure to follow through when the time comes. This proactive step showcases your commitment to fairly rewarding your team, even in the absence of immediate salary adjustments. Again, building trust is crucial, so maintaining transparent and open communication about expectations and career progression criteria are a must.

Bottom-line: By understanding dry promotions and their unintended consequences, organizations can mitigate the drawbacks of such promotions and maintain a workplace environment that prioritizes fairness, equity and employee well-being.