As American businesses seek innovative ways to cut costs in a tightening economy, employers may be enticed to promote employees but withhold a salary increase.
This situation is known as a "dry promotion."
Human resources and job experts discussed the impact that "dry promotions" have on employee engagement and productivity — and shared the employer perspective as well.
Despite not receiving a salary bump, some experts encourage employees to be proud of receiving recognition at work for a job well done.
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"A dry promotion signals an employer’s commitment to the employee’s growth with the organization and is usually a sign the employee is performing well," said Vanessa Matsis-McCready, associate general counsel and VP of HR sources with Engage PEO. She is based in New York City.
Employees benefit from gaining new skills and challenges from the new role, along with the added recognition and appreciation.
All of this can improve engagement, Matsis-McCready told FOX Business.
Also, employers benefit by advancing their goals for succession planning and professional development, she says.
Matsis-McCready told FOX Business the answer to this question is a resolute "yes."
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Employees can be open about their salary wishes and expectations, she added.
If funds truly are not available at the time, Matsis-McCready suggested employers might be open to other options for the employee.
These include:
An employee has the right to turn down any type of promotion, said Julia Lyons-Ryle, human resources performance specialist, Insperity, who’s based in Austin, Texas.
"Ideally, managers have talked with employees about their career path prior to the offer and been transparent about the process or potential of a dry promotion," she said.
Lyons-Ryle added, however, that if a dry promotion is sprung without warning, managers should be prepared for the employee to request time to think about the opportunity or turn it down outright.
"Not every person wants to move into a new role with new responsibilities, especially if there is not a pay increase," she said.
Also, she told FOX Business, it’s important to note an employee’s compensation and benefits structure can significantly impact the quality of the workforce and the company’s ability to attract and retain talent.
"A competitive compensation plan leads to stronger job satisfaction and a more engaged workforce," Lyons-Ryle added.
Another concern for employers is that word spreads about a dry promotion practice — and others within the organization may decrease their overall productivity since extra effort is not rewarded, Lyons-Ryle cautioned.
Still another possibility is that employees may look for new opportunities.
"Organizations giving dry promotions are many times unknowingly boosting the resumes of their workforce," Lyons-Ryle told FOX Business.
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"The new title bestowed upon an employee provides them with the opportunity to look elsewhere for the same position with a higher salary."
Michelle Reisdorf, district president for Robert Half based in Chicago, Illinois, advised that employers put in writing that they and/or the employees plan to revisit the salary or raise conversation when circumstances change.
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"Retention is essential in today’s still-tight job market," Reisdorf said.
"Make clear to your top performers that you value them, you are dedicated to their growth and have plans to compensate them accordingly when the time is right," she said.
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