March 6th, 2013 | 6:00 am

Should You Accept a Promotion Without a Raise?

filed under Money Talks

iStock_000003482002XSmallBy Stacey Hawley (Chicago)

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 not all promotions come with raises attached. 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. At other firms, where individuals cannot progress unless someone leaves, a promotion (without a raise) – culturally – may be Oscar-worthy recognition. And yet, at still other firms, promotions without raises are mishandled, cheap forms of recognition that lead to compression and inequity.

Two critical drivers – retention and engagement – fuel base salary increases and promotion decisions. Promotions provide individuals with rewards and recognition, career advancement and job growth. Promotions keep employees engaged, focused and committed to the company and its business strategies. Companies recognize that most employees highlight career advancement as a top reason for staying.

While base pay – cited by Towers Watson’ 2012 Global Workforce Study – remains the #1 reason employees join a company, both base pay AND career advancement rank as # 1 and #2 for employee retention.
Employees receiving promotions without raises may find their engagement teetering. If you find yourself in the position of receiving a promotion without a raise, follow these three steps before responding.

1. Ask

After hearing about a promotion and then learning that there will not be an accompanying base salary increase, digest the news and unearth the reasons behind the decision:

1. Why am I receiving this promotion? Recognition for past efforts or because I am already performing the responsibilities of the new role?
2. Is the scope of this job materially different than my current role? Am I being promoted laterally to expand my skill sets and “stretch” professionally or does the scope of my role materially expand to include more P&L responsibility, additional direct reports, etc.
3. Is anyone receiving a raise or are base salary increases frozen?
4. Why isn’t there an increase associated with the promotion?
5. Do increases expect to be given within the next three months?
6. What do I have to lose by accepting the promotion?
7. What are the other – intangible – benefits received from the promotion? Exposure to new leaders? Enhanced learning? Future career opportunities?

2. Analyze

At this point, assess your career and the company’s situation. Often, pharmaceutical giants employ promotions to develop people. At Johnson & Johnson, “It is often a very big deal, and one that most are excited about because it is a recognition that the company believes that you can handle something which everyone knows is outside your comfort zone,” explains Christine Maroulis, Director, Health Economics and Reimbursement.

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.

The average employee remains with an employer for 4.4 years, according to the most recent available data from the Bureau of Labor Statistics. Plus, Millennials (the youngest employees) only manage an average of two years at one company. The negative connotations associated with shorter tenure no longer exist. Switching companies more frequently is a professionally acceptable alternative.

3. Act

If promotions without raises run counterculture to the organization, accepting the promotion may cause feelings of distrust and lack of appreciation, plus significantly decreased engagement and loyalty. Ostensibly, employees can (a) accept the promotion and await a raise in the future, (b) decline the promotion and endure their current job or (c) accept the promotion, embrace the new responsibilities and reevaluate the situation in a few months. According to Adam Craddock, a 20 year veteran HR Business Executive, “Ultimately, the employee must determine if they are on board with the promotion, the new titles, duties, expectations and future potential – in spite of no immediate change in their current compensation.”

  • Accept the promotion and stay. 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).
  • Decline the promotion and stay in the current role. 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.
  • Accept the promotion and reevaluate later. Consider whether the promotion benefits you developmentally and promotes your ultimate career goals and objectives. If so, 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.

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.”

2 comments

  1. Should you accept a promotion without a raise | i360 (The Diversity Social Network)

  2. Tricia

    Hi Stacey,

    Thank you for the article, this is a topic that I believe warrants attention and can also be very difficult for the individual involved. But I do have a few comments and questions.

    First, you state “The negative connotations associated with shorter tenure no longer exist. Switching companies more frequently is a professionally acceptable alternative”. I have not found this to be the case in my experience. In my frequent conversations with recruiters I am told more often than not that one of the top criteria when evaluating a résumé is to look for potential “job hoppers” to eliminate them from consideration. Only rarely, such as when a skill set is hard to find or something else jumps out, will the recruiters talk to the person to see if there might be a reason for frequent job changes. Additionally, in my personal experience (and I work in a field where frequent job changes are more common), I am always asked about my own frequent job changes, and am also told this is considered a negative characteristic of my résumé. I would be interested to hear more about how you came to your conclusion.

    Second, you mention that one option the individual has in this situation is to decline the promotion. It is also my experience that often a promotion is given, not offered, and declining the promotion would be the equivalent of resigning from the company. What advice would you have for someone that found themselves in this situation?

    Third, if a promotion is given or offered without any pay increase, but the new responsibilities are determined to warrant a pay increase given what would be considered within the range of fair market compensation for that specific position, how would you suggest a person address the situation?

    Thank you!