Laura Iñiguez, Content Manager at Hirebook
Laura is a content and social media strategist with deep experience in Employee Engagement, People Management, and Culture. She works with Hirebook to bring their innovative best practices to life through content, videos, and webinars seen by thousands around the globe.
Pub: November 19 2021
Upd: January 13 2022
We all want to be rewarded for our efforts and feel like everything we’ve done, the time and money invested in ourselves, was worth it. So, an employee promotion is a great way to be rewarded, since they literally mean you’re advancing to a higher position, with higher-level job responsibilities, better benefits, and, best of all, a higher paycheck (well, most of the time).
It’s important to understand that not all promotions include a change in salary, but they still are a stepping stone that brings employees closer to their ultimate professional goals. Let’s break down the types of employee promotion you can find within an organization:
Types of Employee Promotion:
1. Dry Promotion
A dry employee promotion, also known as a lateral move, is not something that excites employees that much, as it basically means employees will be put in a different position at the same level, so they’ll experience an increase in responsibilities but won’t get the benefits or higher salary. This move is regularly used to test an employee’s leadership skills prior to offering them an actual employee promotion, and can also help them develop certain skills needed to move upwards in the company.
2. Horizontal Promotion
A horizontal employee promotion compensates an employee with a paycheck increase, but it doesn’t involve much change in responsibilities. It also doesn’t change their position per se. You can think of it as a ‘seniority’ of sorts, they get a reward for their hard work and dedication, as well as the time they’ve been serving the company.
3. Vertical Promotion
Now, this is the kind of employee promotion we all think of when hearing the word “promotion”. This is an upward movement in the org chart, and it obviously adds new responsibilities, status, benefits, a higher salary, etc. For example, upscaling from a sales rep to a sales supervisor.
This type of employee promotion doesn’t always happen within the same department, it could even put you in a different one. Like moving from the marketing department and becoming an HR manager, if you meet the requirements and fit the job description, changing the nature of your job is not uncommon with a vertical promotion.
4. Open or Closed Promotions
When a company wants to fill a position without recruiting people from outside the organization, they hold an open promotion call, which is a situation in which every person in an organization is eligible for a position. Moreover, in a closed promotion only selected team members are eligible for said position.
Pros and Cons of Employee Promotion
An employee promotion is desired by employees because of the impact it has not only on their salary but on the amount of authority the new title entails, the added responsibilities, and the opportunity to have a bigger input in the organization’s decision making and future. It’s a sign that their employer values their work and wants them to make even greater contributions. A job promotion is also a visible action that shows other employees what behaviors, attitudes, and commitment levels are desired by their employer. Some of the most relevant positive aspects of an employee promotion are:
- Reduce Attrition - An employee promotion usually comes with a pay raise, which is definitely a huge motivator. But even just being noticed and valued for our contributions helps drive more employee engagement. This study shows that 40% of millennials expect a promotion in one or two years after joining a company, and it also states that, if they don’t get one, they would leave the company to look for opportunities elsewhere.
- Cost-Efficient - Hiring from the inside is less expensive than hiring an outsider. This study by the Wall Street Journal found that companies can pay up to 20% more when onboarding a new employee into the company. It’s definitely more beneficial if your HR department can promote employees for some of the open positions.
- Career Growth - One of the main concerns of today’s employees is following the right career path. When a company believes in promoting their employees, it shows that they support their people’s career development and provide career advancement opportunities.
- Recognition - Employee recognition is an extremely important element of an organization’s company culture. There’s no better way to reward and recognize an employee’s efforts than a job promotion.
Even when it seems a promotion is what ultimately every employee wants, it’s not always what they need, and vice versa. Promotion is not necessarily the right thing to do with every employee, it’s possible that some people don’t want higher responsibilities and are happy doing what they do. Not everyone wants to be a leader, so promoting someone who does a good job and doesn’t want to rank up can be counterproductive.
Companies have made employee promotion the primary method for employees to increase their salary and authority, and they find themselves challenged to provide other alternatives of career development for employees who deserve those benefits and recognition that come with a promotion.
Employers that constantly promote their employees will eventually make these promotions pointless and worthless. There are several other ways to make employees feel valued without resorting to promoting them.
When to Promote an Employee?
Well, there are many answers to this question:
- When a Position Opens up - Your human resources department may want to take a look at the entire workforce to determine if it’s better to promote rather than hiring an outsider.
- To Recognize an Employee - Yes, sometimes it is good to reward employees that perform outstandingly with a nice promotion, even if it’s a dry or horizontal promotion.
- After a Performance Review - Usually, when having a year-end review, employees expect to hear what’s going to change in their job description and if they’ll get a raise. This is not something that “has to” happen, but if their proven track record deserves it, you can help shape their professional future with a promotion.
- Emotional Intelligence - Emotional intelligence is crucial in a higher role, and a key skill for managers because they have to lead their team and connect with others. If you’re looking to promote someone, keep an eye out for those with this skill.
Employee Promotion is a tricky aspect of organizational performance management, but it’s also quite manageable. Having a clear and positive company culture will help you communicate to your workforce how this aspect is handled within the organization. Remember you can always rely on a Performance Management tool to check-in with your employees and see how they feel, so you can take action before a little problem becomes a big one.