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Promotions without a raise can still be motivating

By Koula Vasilopoulos



One of your top performers has filled the same role for several years and gives their all every day.

You’ve been impressed by their leadership skills and think they’re ready for more responsibilities. A promotion is the next logical step. But what do you do when a worker is ready to move up, but you can’t offer a salary increase?Limited budgets are redefining the very notion of promotions. To compensate, human resources departments are finding creative ways to reward hardworking staff. In fact, promotions without a monetary component are increasingly common. Of the HR managers polled for a recent OfficeTeam survey, 47 per cent said it was a regular practice – compared to 25 per cent seven years ago.

Employees have come around to this “new normal.” Of the workers OfficeTeam surveyed, 55 per cent would accept a promotion without a bigger paycheque. More men (59 per cent) than women (51 per cent) are open to the idea. The younger the respondent, the more willing they are to forego the raise if their job titles were upgraded.

importance of rewarding employees

Why would a company even want or need to promote a worker when there isn’t an empty slot higher up on the hierarchy? The answer in one word: appreciation. When workers don’t feel valued, they start disengaging from their job. Unhappy employees lead to low productivity and a dip in office morale. If things get really bad, people leave.

A high turnover rate directly affects your bottom line, as hiring new staff and onboarding is expensive and time consuming. Your company also loses organizational knowledge. Meanwhile, the remaining employees have to pick up the slack – leading to stress, disgruntlement and a general feeling of being underappreciated. And the cycle starts again.

Rewarding staff when raises aren’t possible

When there’s simply no room in the budget to hand out a promotion with a commensurate salary increase, do the next best thing: give out promotions without a raise. A new title isn’t a panacea, but it can help because it gives the employee a vote of (your) confidence, which is sometimes more meaningful than more money.

An enhanced job title also looks good on their business card and LinkedIn profile. The OfficeTeam study found that among the managers surveyed, a worker is promoted after three years, on average, in the same role.

In addition to a shiny new job title, a company with salary budget constraints can still reward workers – and keep staff engaged and satisfied – with perks and upgrades including:

A one-time bonus, even though it’s cash, may be easier for your budget to handle than the recurring expense of a salary increase

Time off, such as additional vacation days per year or a sabbatical period, can allow staff to pursue personal interests

The option to telecommute is a strong incentive, whether part-time or full-time; so is the option for flexible scheduling

Mentorship with a senior manager, who can hone a junior or mid-level employee’s leadership skills and guide them on their career path

Continuing education support could include exam fees for certifications or tuition reimbursement for another degree

How to talk to employees about promotions without a salary bump

Ready to reward your high performers without giving them a raise? Here are some suggestions for approaching this conversation:

Offer the promotion as part of their performance evaluation. This is the ideal time to review their work, thank them for their contributions and then upgrade their job title. If it’s possible, explain that while the company is unable to increase salaries at this time, you’re happy to give them additional perks, such as a $1,000 merit bonus and five additional vacation days.

Give them greater job scope. A promotion should come with additional areas of responsibility and employees understand this. Work with them to solidify what the expanded role might look like.

Listen to their concerns. Not everyone is happy with a promotion without a raise. This is understandable, especially if their paycheque has remained the same for several years. Be prepared for this. Be open to negotiations on bonuses, remote work options and other non-salary items. Keep a few extra perks up your sleeve to further sweeten the deal if necessary.

There are many ways to retain your best staff short of a monetary raise. Presenting them with added responsibilities and more trust in making decisions will give them a sense of ownership and autonomy that a bump in salary can’t.

Koula Vasilopoulos is a district president for OfficeTeam and Robert Half.




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