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An alternative way to curb employee dissatisfaction is to provide additional flexibility or benefits in place of a significant salary increase.
Employees who accepted a promotion without a pay rise may leave for a better-paying company within six months, as emphasised by a respondent in a recent survey by people2people Recruitment.
So-called "dry promotions", the survey revealed that 23% of respondents reported seeing a colleague promoted with added responsibilities but no corresponding salary increase, while 16% disclosed that they had personally experienced such a promotion.
Without receiving corresponding financial compensation, respondents pinpointed the main negative outcomes associated with "dry promotions" included:
- resentment (31%)
- demotivation (29%)
- higher turnover risk (25%)
- reduced productivity (15%)
One respondent shared: “More responsibility means more money. Simple, really.”
Taken from another perspective, employers argued that budget constraints (13%) or the promise of future pay rises (27%) may justify promotions without immediate financial reward.
However, Erin Devlin, Managing Director, people2people Recruitment, highlighted that dry promotions might appear to be a short-term solution for businesses facing budget constraints, but they can have long-term negative impacts on employee morale, loyalty, and overall productivity.
“It's not an ideal situation as it puts employers at risk of losing staff. While you might be able to delay a pay rise for a few months or even years, talent will eventually move on if they feel their salary isn't competitive with the market.”
For employees, some are willing to take on the extra responsibilities for the sake of skill growth, as 40% of those surveyed felt skill development was the primary rationale for accepting a promotion without a pay increase, while 21% saw it as recognition of new duties.
“Career progression, training, and development are crucial to employees, yet many employers have been slow to acknowledge this,” added Devlin.
For employers who are considering promoting employees but cannot provide an immediate salary increase, here are some key takeaways:
- Offer non-monetary benefits: Consider offering additional benefits such as increased flexibility, more vacation time, or professional development opportunities. These can help ease employee dissatisfaction and demonstrate a commitment to their wellbeing.
- Set clear pathways for future compensation: Communicate a transparent timeline for when a salary adjustment might occur, tied to specific performance metrics or budget improvements. This helps manage expectations and reassures employees that their efforts will eventually be rewarded.
- Enhance recognition and support: Acknowledge the extra responsibilities with visible recognition, such as formal title changes or leadership opportunities. Providing mentorship, training, and development resources can make employees feel valued and supported, even in the absence of immediate financial rewards.
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