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.
3 Reasons Companies Typically Grant Promotions Without Raises
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.
1. No Funds
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.”
2. Bad Timing
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.
3. Poor/Inept Management
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.
Considerations Before You Accept
If you are offered a promotion without an accompanying raise, ask yourself these questions before accepting the promotion.
- Why am I receiving this promotion? Recognition for past efforts or because I am already performing the responsibilities of the new role?
- 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.
- Is anyone receiving a raise or am I the only one receiving a promotion without a raise – is this normal company practice?
- Why isn’t an increase associated with the promotion?
- Can I expect to be given an increase within the next three months?
- What do I have to lose by accepting the promotion?
- What are the other — intangible — benefits received from the promotion? Exposure to new leaders? Enhanced learning? Future career opportunities?
- How will I feel or respond if the eventual raise does not match the promotion, especially after waiting and doing more work for the same money?
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:
1. 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).
2. Decline the promotion and stay in your current role.
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.
3. Accept the promotion and reevaluate later.
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.
Selecting Your Best Option
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.
The Bottom Line on Promotions Without a Raise:
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.”
More About Successful Salary Negotiation
- Guide to Salary and Compensation
- When to Ask for a Raise
- What to Expect in a Job Offer
- Winning Negotiation Strategies for Your New Job (free ebook)
- Salary Negotiation Strategies for Stay-at-Home and Working Moms
- Answer This Interview Question: What Is Your Current Salary?
- Answer This Interview Question: What Are Your Salary Expectations?
About the author…
Stacey Hawley is a salary and compensation consultant and career coach. She helps companies reward and recognize their people effectively and helps individuals like you earn more money. You can connect with her on LinkedIn, Twitter, or via her website.
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