More Companies are Offering Promotions Without Raises

More Companies are Offering Promotions Without Raises

On the surface, one would think that accepting a promotion without a corresponding increase in salary would be a situation that most employees wouldn’t be very interested in, but times are changing. While it used to be commonplace to expect a pay bump as one ascends the ranks of their company, that’s not really the case anymore. Over the better part of the last decade, quite a shift has developed in terms of what employees are willing to accept when developing their career. Even if its promotions without raises.

Earlier this year, staffing firm OfficeTeam, which is a subsidiary of the national staffing firm Robert Half, conducted a survey of more than 300 human resource managers at U.S. companies with 20 or more employees and more than 1,000 U.S. workers 18 years of age or older employed in office environments. Their findings revealed an emerging flexibility in terms of the types of things employers are offering those they wish to promote, and a change in what workers are comfortable with.

Nearly two-thirds of workers (64 percent) reported they’d be willing to accept an advanced title that doesn’t include a raise, up from 55 percent in 2011 when the organizations conducted a similar survey.

Why have workers’ opinions begun to change so much? Part of the answer might lie in a greater desire for more of a work-life balance, wherein the key goals for many working professionals is focused onspending more time doing the things they enjoy outside of the office. It also might have a lot to do with an individual’s marketability and future opportunities.

“As for why more workers are willing to accept a promotion without a raise, it could be that today’s workers care more about their titles. Accepting increased responsibility and a new title shows career progression and could make candidates more marketable. It may also be that even though it’s a candidate market, many employees are concerned about job security. Overall, more workers may be looking beyond the number on their paycheck and examining the full compensation package,” said Sonda Sorg, metro market manager for Robert Half in Indianapolis.

“Offerings like more vacation time, flexible work hours, and telecommuting options have become more commonplace to incentivize employees,” she added.

On the employer side of the spectrum, the desire to promote and keep a company’s top talent is often stifled by budgetary constraints, putting many in a position where they’re unable to offer salary increases. Evidently, it’s become much more common in the last few years to keep budgets balanced and employees happy by offering additional benefits rather than raises.

Nearly two in five human resource managers (39 percent) said it’s common for their company to offer employees promotions without salary increases. That’s a 17-point jump from 2011.

“With Indianapolis’ tight hiring market and limited availability of skilled candidates, employee retention is top of mind for many employers,” said Sorg. “These days, those retention efforts go far beyond offerings of competitive salary to include more vacation time, bigger bonuses, flexible schedules and telecommuting options, professional development, and more.”

Brandi Britton, a district president for OfficeTeam, said, “One way employers can motivate and retain their workers is by providing advancement opportunities to those who have excelled in their positions. Awarding promotions without raises isn’t ideal, but budgets are often a limiting factor. The employee’s existing salary may also be a consideration, particularly if they’re already making an above-market rate.”

Among the types of individuals most likely to accept an offer of a promotion without a raise, the researchers found that younger male workers were more receptive to the concept. Almost three-fourths of all males said they’d accept the offer, with those aged 18 to 34 being the most willing, compared to just over half of all females.

At the very least, the increasing commonality and acceptance of awarding promotions without raises presents companies with a new set of options for talent development and retention strategies among their rosters of employees. What could previously only be solved monetarily might today be achieved with some simple additional scheduling flexibility, among other things. Ultimately it all comes down to what your employee wants and your company would be willing to provide, but one thing’s for certain: there are now more affordable options on the table than ever before.



Five Tips for Workers When Considering Accepting a Promotion Without a Raise

  1. Get the details.Discuss the new role’s responsibilities and expectations with your boss before making a decision.
  2. Weigh the pros and cons.Think about whether the position aligns with your personal and professional aspirations.
  3. Request a follow-up.Ask for a compensation review in three to six months.
  4. Check on other incentives.Aside from pay, you may be able to negotiate a flexible schedule, extra vacation time, a bigger bonus, professional development opportunities or stock options.
  5. Decline gracefully.If you decide to turn down a promotion, diplomatically explain how staying in your current role is better for you and the company.

Source: OfficeTeam



By Nick Dmitrovich with data and input from Robert Half