By Stacey Hawley
Congratulations! You are being promoted.
Receiving a promotion is a big deal -- a very big deal.
Promotions mean more responsibility, new challenges, and an inherent recognition of an employee’s abilities and potential.
But what about the raise?
Promotions are a means to an end -- the way up the career ladder.
Two critical drivers -- employee retention and employee engagement -- fuel base salary increases and promotion decisions from the employer's perspective.
Promotions provide individuals with rewards and recognition, career advancement, and job growth. Promotions keep employees challenged, engaged, and committed to the company and its business strategies.
Raises communicate a deeper message -- "We value you. We recognize the work you are doing is worth more in the marketplace and at our firm. We want to keep you here."
Not all promotions come with raises attached.
Many times, companies offer promotions to manage internal change and restructurings, to reward employees during an "off-cycle" (when pay adjustments do not typically occur), or to prevent a highly valued employee from leaving.
They can't afford a raise. During difficult financial times – when many companies freeze base salaries to control costs – employees may be promoted with the promise of raises when the economy improves.
These companies still value their employees and need them to reverse the slump.
Promotions given in these situations mean “we really value you and want to pay you but we can’t right now."
The timing is not quite right, but the "people manager" recognizes it is time to promote an employee.
The employee might be "at risk" for leaving, ready to handle more responsibilities (or already handling more responsibilities) and an asset that can’t be undervalued. However, there may be other organization changes on the horizon and doling out raises would rock the boat.
In this case, a promotion may be given to bide time until all the changes are announced and the raise can be awarded.
Some companies do not value their biggest assets (a.k.a., their employees)
Sadly, in some organizations, promotions without raises are mishandled, cheap forms of recognition.
Companies without formalized HR programs or a deep understanding of the importance of culture and recognition hand out promotions like candy. Promotions are awarded without a consistent set of standards, expectations, or requirements.
In the end, these companies are left with compression, inequity, higher turnover, unengaged employees, and poorer financial performance.
If you are offered a promotion without an accompanying raise, ask yourself these questions before accepting the promotion.
Employees receiving promotions without raises may find their engagement with their job and employer teetering. After hearing about a promotion AND learning that there will not be an accompanying base salary increase, digest the news, and unearth the reasons behind the decision before accepting.
Once you have answered the questions above, you have these options to choose from:
Leaving the firm may pose greater risk than staying. The promotion could be offering the opportunity to work in a new field, expand current relationships, develop new relationships or launch a career further.
The foregone pay increase might be worth the opportunity. If this course of action suits your situation, consider asking for other forms of compensation (e.g., additional vacation, higher incentive opportunities or equity).
While the new role may significantly expand your responsibilities -- additional direct reports or functions or increased P&L accountability -- if accepting the promotion without a raise negatively impacts your personal career objectives, self-confidence, or self-worth, your personal dissatisfaction outweighs the value provided by the promotion.
Consider whether the promotion benefits you developmentally and promotes your ultimate career goals and objectives. If it does, embrace the new role and responsibilities, and reevaluate the situation in a few months.
Revisit the money discussion or leapfrog to a desired role and pay level elsewhere using the newfound job title, roles, and responsibilities.
At this point, assess your career and the company’s situation. Determine whether (a) there is long-term career advancement and growth with this firm and (b) you actually want a long-term career with this company. Or consider whether the promotion will help you in a job search, even without the raise.
If the title and responsibilities increase your marketability, it may be worth it for the short term.
Accepting a promotion without a raise -- or promise of a raise in the near future -- can have both positive and negative personal consequences, depending on the employee’s attitude and reasons for accepting the promotion. Understanding the reasons behind a promotion without a raise -- and its potential benefits -- requires some investigation and soul-searching before saying "yes."