The Wall Street Journal article The Risks Of Promoting Without Giving Raises by Paul O. Lopez explained that there are many companies that want to promote their employees even though they are experiencing hard economic times.
2 Reasons Why to Promote Without a Raise?
The companies are promoting without raises for two reasons:
- They know the employees will take on the additional responsibilities to help the company
- The promotion will boost employee morale.
The companies, however, are unable to provide raises with the promotion. There is nothing illegal or inappropriate about doing this.
Factors to Consider When Promoting Without Giving Raises
Companies promoting without giving raises should consider past employees that have been promoted to similar positions and the types of raises they received. They must take particular caution when there are promotions that could be construed as racist or discriminatory.
If you decide you are promoting without a raise, be sure to keep good documentation of all your actions. Keep financial documentation explaining that you are in a situation that merits not giving a raise when promoting. When you choose not to give a raise, you should also explain to the employee why you are not giving the raise and that you will review the financial outlook and possibly give a raise in 3, 6, 9, or 12 months.
If you are a leader facing the situation where your company is struggling to survive, my heart goes out to you. During a time like this, you must manage how your employees perceive you and the company stability. As the leader, perception is everything, so you must manage how the employees perceive the situation.
If your employees think that the company is in bad shape, they may want to jump ship. It is possible that if they jump ship, they will be premature if things are better than they realize. Once one person leaves, others will begin to follow. If that happens, you will lose your talent and then everything will go downhill from there.
Providing Stability and Consistency
Although you may be in a difficult situation, you must work to keep the employees happy and provide an environment of stability. One approach you can take is to have a mentality of, “We’re in this together”. If you need to eliminate some of the overhead costs through pay scale reductions, you should cut back on everyone’s pays rather than singling out a specific group of employees.
You must be consistent across the company and even the CEO should see the pay cut. In addition, leaders in this situation have quite a challenge because when times are hard they must keep morale up. Keep an optimistic outlook and always try to think outside the box for solutions. Your attitude will rub off on the employees.
If you, as the leader, decide to promote people without a raise, you must be sure to revisit the topic regularly with the employee so they know you are still working on it. There is nothing worse than being told you are getting promoted or receiving a raise, but neither ever happens and you are not told why. You must keep your employees informed as much as you can. If you do so, your employees will trust you more and you will gain your respect.
What approach would you take if you were going to give your employees a promotion without a raise? Please share your thoughts and comments in the comment section below!