There’s a surprising workplace trend on the rise: promotions
without a pay raise.
A raise-less promotion at an end-of-year review can understandably come as a shock to employees who feel like they’ve put in the time, effort, and dedication needed to climbing the corporate ladder, but data is showing that this is becoming a more common phenomenon.
In 2018, 39% of employers handed out promotions without a pay raise, up from 22% in 2011.
According to new research by staffing firm OfficeTeam
What is Contributing to Promotions Without Raises?
U.S. employers across the board appear to show little growth
in their salary budgets, which is one factor contributing to title-only career
bumps. In 2018, Mercer’s
Compensation Survey found that budget trends for non-union employees
have remained mainly flat for the past four consecutive years.
Top factors influencing projected compensation decisions in 2019 include concerns on retention of current employees and competitiveness with external labor markets.
But with stagnant salary budgets that are all too often lumped together with promotional increases on the same payroll line, we can expect that this is a problem that will not be curbed any time soon.
Research shows that some employees are willing to accept a title change without a pay increase, particularly along demographic lines.
64% of surveyed workers said they would accept a higher title that doesn’t include more pay, compared to 55% in 2011.
For example, a 2018 study by OfficeTeam, a company of Boston staffing firm Robert Half, tells us that male employees are much more likely to accept these promotions than their female counterparts. The study also revealed that workers ages 18-34 are the most willing to take a new title that does not include a raise.
Despite this data, employers should be ready to face higher rates of turnover, particularly among young professionals who aren’t seeing pay growth. Job-hopping millennials is not just a stereotype: A recent Gallup report on the millennial generation highlighted that 21% of millennials have changed jobs within the past year, which is three times that of non-millennials. Considering that the average professional secures a promotion every 2.5 years, some millennials may simply be adapting their career strategies to compensate for stiff balance books.
How to Move Forward When a Promotion is Offered Without a Raise
Negotiating pay can be complex and emotionally-charged. We sought out expert advice with human resources expert, Christina Luconi, Chief People Officer at Rapid7, an international cybersecurity firm with a headquarters here in Boston. Here are her top tips on what to do if you find yourself proposed with this kind of opportunity.
1) Understand why the promotion is coming without a raise. Rather than get emotional and potentially irrational with disappointment, remain calm, and step away. There may be a solid reason for why you’ve been presented with a raise-less promotion, but you must be in the right frame of mind to be open to hearing it. When you feel ready, sit down with your manager again to discuss further.
2) Be prepared to discuss your value and impact. It shouldn't be hard to argue that if you are deemed worthy of promotion, you are bringing significant value to the team. Be able to articulate your accomplishments.
3) Gather data: Do some work to understand the salary range for this new role. Whether it's with readily available data or from speaking with others who share similar roles, gather several examples for comparison. Remember, you are new to this role, so logic would suggest that while you should be paid fairly and in range, you might be starting at the lower end of the range. Instead of walking into the conversation saying, "I want a raise with this promotion,” try approaching with examples of your impact, plus backup compensation data. Also, don't leave the ask open ended; ask for what you want.
4) If you are met with a "no" for whatever reason, ask follow up questions.
a) What is the timeframe? If you are excited to tackle the new role, it's completely fine to say: "I'd love to take on this new role, but request we meet in three months to revisit the compensation piece."
b) Are there other opportunities available to me to help me excel in this new role? Whether it's trainings, conferences, etc., any benefit that aids in your learning and growth can be a nice complement to continuing your development with or without a raise.
c) If no compensation change is on the horizon, it's time to start exploring new opportunities. Be sure to continue to perform your best until you land that new role, and build as many skills as you can to prepare you for whatever that may be.
In service to all professionals in the region, the Greater Boston Chamber of Commerce is invested in ensuring that Greater Boston is the best place for businesses and people to thrive. Promotions without raises can be a great talent retention tool in some cases, but it’s important for decision-makers to consider this strategy carefully. Take advice from Christina, and gather your data whether you are investigating for your own career health or for the welfare of your business.
Do you have thoughts on this topic or other talent and workforce issues? We would love to hear them! Please contact us to share your opinion, and stay updated on trends in Boston business by signing up for alerts about our news, events, and thought leadership.
Christina Luconi – Chief People Officer at Rapid7