How Do Employee Promotions Work?
Employee promotions reward your workers for their contribution to the company. The promotion itself usually involves moving to a different position and rank, often with a mix of the following:
- New job title
- Elevated responsibilities
- Increased salary and associated perks
- Decision-making power
- Leadership roles and responsibilities
There's no one-size-fits-all approach to promotions at work. Different companies handle them in different ways and may choose to promote an employee based on the following:
- Length of service: A long-serving employee will have in-depth knowledge of your company's brand, mission, and values.
- Performance: An employee who consistently exceeds targets and achieves goals may be ready for the next step.
- Experience: When an employee has completed relevant training, worked on a variety of projects, or acquired new skills, they demonstrate their commitment to growth.
- Additional responsibilities: An employee who has already exceeded the expectations of their job description should be considered for promotion.
What Are The Different Types Of Employee Promotion?
We often associate promotions at work with a straightforward move up the corporate ladder. In reality, you might come across several types of promotion:
A horizontal or lateral promotion is when an employee transitions to a different job at the same level within the organizational hierarchy. This promotion is an opportunity to gain new experiences and master new skills in a separate area of the company, often without a significant change in authority or pay.
A vertical promotion is a traditional upward movement in a company. For example, from direct report to supervisor to line manager to senior manager. This movement typically includes an increase in title, status, responsibilities, and salary as the employee progresses to each new rank.
A dry promotion happens when an employee receives a new title and extra responsibilities without any accompanying salary or benefits increase. The promotion looks good on the employee's resume but may harm their morale and productivity.
An open promotion allows all employees to apply for the position regardless of their rank, department, tenure, or other criteria. This fosters a sense of fair play and transparency within the organization as everyone gets an equal chance to advance.
A closed promotion is not publicly-announced—the vacancy is only available for a select pool of employees. Management may recommend an employee for promotion based on their assessment of the individual's performance and potential.
2023 Employee Promotions Statistics
At Nectar, we recently surveyed 800 full-time workers in the United States to get a better understanding of promotions and career growth opportunities for employees. Here's what we found:
1. 79.5% Of Employees Know What They Need To Do To Earn A Promotion At Work
According to Nectar's research, almost 8 in 10 employees are clear about how to progress to a different rank.
The numbers differ by nearly 7% according to gender, with 83.11% of men understanding how promotions work in their respective organizations, compared to 76.25% of women
Confidence about the mechanics of promotions also varies according to age and education:
85.82% of 35 to 44-year-olds understand promotions compared to 73.81% of 18 to 24-year-olds.
87.5% of post-graduates understand promotions compared to 76.04% from vocational and technical college backgrounds.
Unsurprisingly, those earning $100k+ have promotions figured out, presumably because they’ve achieved a few already. Some 83.85% of employees in this high-earning bracket know how to earn a promotion, compared to 74.31% of people earning less than $25k.
2. 65.38% Of Employees Feel Their Company Is Actively Invested In Their Career Growth
It’s fantastic that two-thirds of employees believe their company wants them to succeed. 21.13% of employees strongly agree that their employer is actively invested in their career growth. 44.25% agree with this statement. Only 12.5% disagree or strongly disagree that their employer supports them professionally.
Concerningly, when we dig into the data, there are clear gaps between how male and female employees perceive their employer. 22.69% of men and 19.71% of women strongly agree their employer is invested in their professional growth, creating almost a 3% gender gap. 47.76% of men and 41.09% of women agree, resulting in a 6.67% gender gap. This is matched at the other end of the scale, where more women than men disagree that their employer cares about their progress.
While education and age don't appear to skew the responses significantly, income levels certainly do. Only 14.66% of employees earning $50-74,999 believe their employer cares about their professional development, compared to 26.15% of employees earning $100k+.
3. 63% Of The Workforce Has Received A Promotion Within The Past Two Years
Amid global economic uncertainty and mass layoffs spanning multiple industries, you might assume employee promotions have taken a backseat. But when Nectar asked employees about the last time they received a promotion, the data said otherwise, with almost two-thirds of survey respondents reporting a promotion in the past two years.
- 31.5% of people received a promotion within the past twelve months
- A further 31.5% of people received a promotion within the past 1-2 years
Unfortunately, this hasn’t been the case for the remaining third of the workforce:
- 7.63% haven’t been promoted in 5+ years
- 14.25% have never received a promotion
Understandably, newcomers to the workforce may not have had a chance to receive a promotion yet, but this only applies to 14.29% of survey respondents in the "never" category. Concerningly, 18.92% of people aged >54 have also never received a promotion, a significant chunk of mature workers who haven't progressed over careers lasting several decades.
4. 33.63% Of The Workforce Have Looked For A New Job In The Last 6 Months Due To Lack Of Career Growth
In the aftermath of quiet quitting and the Great Resignation, it remains the case that many employees still have itchy feet. 33.63% of the workforce have looked for a new job in the last six months due to a lack of growth pathways in their current role. This is fairly evenly split across male and female employees, with 32.19% of men and 34.92% of women seeking new positions elsewhere.
Age is a significant factor, as 39.29% of 18 to 24-year-olds have sought new roles compared to just 24.32% of >54-year-olds.
Income is another critical variable, with only 28.85% of people earning $100k+ looking for a new job, compared to 41.28% of people in the lowest salary bracket of <$25k.
Why Should You Commit To Employee Promotions?
Employee promotions may be a game-changer when it comes to holding onto your staff. Here are the reasons you should commit to advancing your team members beyond their current positions:
1. Display Your Company Values
Openly promoting your employees demonstrates that your organization values growth and development. This sets a positive tone for the rest of the team, who will see what is possible and strive to achieve recognition for their hard work and dedication.
2. Increase Motivation And Productivity
Employees who feel valued may be motivated to work harder and produce better results. With a clear promotion policy, employees will know exactly how to progress by:
- Building specialist or leadership skills.
- Gaining more experience.
- Creating quality output for their team.
3. Improve Employee Retention
Employees feel more inclined to stay with a company that offers clear career development opportunities, which is a win-win for both parties. When employees remain loyal to an organization, the company avoids expensive recruitment and onboarding costs, while employees take advantage of free learning and development.
In a recent conversation with HR executive Jessica Winder, we discussed how companies can create an environment where job hoppers want to stay. Frequent promotions are crucial to encouraging employees who might want to leave for a better opportunity, increased responsibility, or a different experience. Winder shares her experience with the importance of promotions in employee retention:
"I have a close friend who's been with the same company for almost 10 years, but she's getting promoted. So whereas I'm leaving, she's getting promoted, every two years."
11 Ways To Keep Employee Promotions Fair
Promoting employees fairly is challenging yet critical to maintaining a motivated, productive, and engaged workforce. Here are 11 practical strategies to ensure your promotion process is transparent and beneficial for all employees.
1. Create A Clear Promotion Policy
Establishing a clear and comprehensive promotion policy is one of the first steps toward ensuring fair promotions. This step removes ambiguity and dissatisfaction, effectively setting a clear path for your employees' growth and development. This policy should:
- Define what promotion means within your organization.
- Describe the different levels or tiers of promotions that employees can aspire to, for example, supervisor or senior manager.
- Outline the specific promotion criteria, such as performance metrics, skills, or certifications.
- Indicate the process for applying for a promotion, including who to speak to, required documents, and deadlines.
- Clarify who makes decisions, for example, managers, HR leads, or executive teams, ensuring transparency in the selection process.
2. Implement Career Progression Paths
Employees should feel confident about how to progress from A to B to C in your organization. Career mapping is a great way to achieve this, providing employees with a visual representation of their growth opportunities. This involves creating a competency framework that clearly outlines the specific skills and competencies required for each current role in your organization and highlights how to progress from one position to the next.
“At my workplace, my manager created a "Career Ladder" that clearly outlined the path from entry-level to senior roles, including the skills and experiences required at each step. This gave employees a clear understanding of what they needed to do to advance in their careers.
We are also assigned a personalized learning path. This approach ensures fairness in promotions and motivates employees to seek professional growth within the company rather than elsewhere.”
"The asset itself is a branded flow chart with each role and possible progression paths. There are bullet points for title expectations and then separate bullet points for advancement strategies. The goal here is to help all employees visualize their potential, assuming they decide to pursue a longer career with QBench. It's particularly illuminating for junior employees to see they are only 3-4 steps away from running a department. It'll take time and effort, but at least they'll know what they're aiming for."
3. Avoid Quiet Promoting
Move over quiet quitting, there’s a new trend in town. Quiet promoting is the practice of promoting a staff member without formally recognizing or congratulating them. Managers guilty of quiet promoting might typically:
- Ask employees to handle tasks outside of their job responsibilities.
- Expect employees to absorb extra duties after a coworker leaves.
- Assign extra tasks to employees who have the same job title as peers with fewer tasks.
Example: Ali works for a software company that has conducted a series of layoffs this quarter. There's no money available for recruitment, but the team requires a new project lead. Ali's manager starts to assign her the responsibilities associated with this role in addition to her current workload. She doesn't receive a formal promotion or any related rewards, such as a bump in pay or a new title. The result? The company saves money in the short term, but Ali quickly becomes dissatisfied and burned out. She leaves the company to pursue a better-paid opportunity for a rival organization.
A Job Sage survey of 1,000 employees revealed:
- 78% of workers have experienced quiet promotions
- 67% of workers have absorbed additional workloads after a coworker has left
- 73% of workers have been asked directly by a manager to handle additional work
- 57% of workers have felt manipulated or taken advantage of as a result quiet promoting
Quiet promoting is prevalent in the following industries:
- Art & design (89%)
- Hospitality (89%)
- Food services (88%)
- Government (88%)
- Education (81%)
Quiet promoting may not seem damaging at first glance—surely, employees provided with additional responsibilities have the chance to prove their worth? The problem is that employees should be able to discuss their workload with their manager, yet many workers will feel uncomfortable pushing back.
Job Sage reveals that only 22% of employees have raised concerns about quiet promotions. Those most likely to accept increased responsibilities without a promotion reward include underrepresented groups who don't want to rock the boat or employees with residency visas tied to their employment.
4. Create Opportunities For Promotion
Employees must know what promotion opportunities look like, and companies must know how to offer them, even if they're on limited budgets. Some easy ways to move employees through your ranks include:
- Creating project-based opportunities that allow employees to gain exposure and demonstrate their capabilities.
- Publishing internal vacancies company-wide before turning to external recruitment teams.
- Developing an internal talent pool to dip into for higher-level positions.
- Using micro-promotions, including job title changes and minor pay raises, as an incremental step.
- Offering additional training when there's no current promotion opportunity to keep the employees progressing before they move into a vacant role.
These ideas ensure companies retain institutional knowledge while ensuring employees feel valued and recognized for their work.
5. Practice Transparency
Companies can be guilty of deploying smoke and mirror tactics when handling promotions at work. Speaking to Business Insider, former head of analytics Brandon Southern at eBay, Amazon, and GameStop described his experience of watching top talent continuously passed over for promotion. He blames a lack of transparency, including:
- Calibration meetings: A panel of managers pit employee performances against each other and decide who has the personality, results, performance, and potential to progress. Employees lack visibility into what happens in these meetings or the ratios of managers to direct reports that calibration panels use to determine promotions.
- Manager communication: Managers may tell employees that they’re doing great work leading employees to assume they will be recommended for promotion. For whatever reason, the manager doesn’t put their name forward.
- Favoritism: Managers with decision-making authority are more likely to promote their team members than those from adjacent departments.
"This means outlining clear, objective promotion criteria and making these guidelines accessible to all employees. The criteria should be performance-based, focusing on specific achievements and skills rather than subjective factors. Furthermore, providing equal opportunities for professional growth is crucial."
6. Implement A Structured Performance Review Process
Performance reviews are essential for determining who is ready to move up. Companies can develop a structured performance review process that considers the subjective, objective, and developmental factors of promotion. Performance reviews should:
- Include regular check-ins between managers and direct reports to discuss career goals, performance against KPIs, and developmental opportunities.
- Evaluate employees against the criteria outlined in their job description, and rate them accordingly.
- Provide honest employee feedback about their performance to help them reach their career objectives.
- Involve a panel of peers who can provide objective opinions on an employee's performance.
“One of our highly talented UX Marketers seemed unfulfilled and disengaged. After having a conversation, I discovered that he desired a more structured workflow to unleash his full potential. I responded by integrating a task-based assessment system into our promotion process.
Each week, I assigned specific tasks linked to our current project—redesigning the user interface for one of our flagship software products. We'd review the completed tasks, looking specifically at the effectiveness of the proposed changes and the feedback from our beta testers.
This not only served as a practical assessment of his capabilities, but also added a transparent structure to our promotion program. Instead of subjective elements like favoritism or tenure, promotions were based on tangible, task-based results.”
7. Provide Training And Development Opportunities
An equitable promotion framework gives employees a chance to grow by offering:
- Training courses and certification
- Career guidance
- Job shadowing
These opportunities allow employees to demonstrate their job competence and aptitude, enabling a more objective assessment of who is ready for promotion. Organizations should develop an action plan that matches employee career goals with relevant training and development opportunities. This shows employees they're valued and will be rewarded for using these resources.
“We have implemented a robust career progression framework that clearly outlines the skills and milestones necessary for advancement. By offering continuous learning opportunities, mentorship, and supportive work culture, we empower our talented team members to expand their expertise and achieve their professional aspirations within our organization. This holistic approach not only fuels their motivation but also significantly reduces their inclination to seek professional growth elsewhere.”
8. Encourage Employee Self-Assessment
Self-assessments empower employees to participate in their own growth cycles. Encourage your team members to offer their perspectives on their performance, including:
- Reflections on their overall performance during the past feedback cycle
- Projects they've worked on
- New skills they've picked up, including outside of work in side gigs and hobbies
- Strengths and weaknesses
- Feedback they've received from peers or supervisors
- Suggested training or development paths
- An overview of the responsibilities or roles they feel ready to take on
9. Foster A Culture Of Continuous Feedback
Continuous feedback involves two-way loops between employees and managers, allowing open discussion and course correction as needed. These conversations involve not only performance reviews but also understanding employee motivations.
This approach gives managers a better view of their direct reports' strengths and weaknesses and the roles they may be interested in or suited for. It also gives employees a voice in the conversation. They can provide feedback on their work in relation to the organization's performance and share their aspirations for future roles.
Example: Tina's manager had assumed Tina would want to move from her current position to a supervisory role within their team. But following a series of regular feedback discussions, Tina's manager understood that Tina felt drawn to a different area of the company. With her manager's support, Tina was able to develop by moving into a project management role in an adjacent team.
10. Monitor And Address Bias
Research published in Frontiers In Psychology reveals that men are promoted more often for “potential” while women must achieve hard performance results before being picked for a step up. Gender bias is just one example of 188 different types of bias in the workplace, which employees can’t eliminate entirely, but can take steps to recognize and overcome. Some common types of bias that could affect promotion decisions include:
- Affinity bias: Promoting employees who are "just like them."
- Halo bias: Judging employees on one positive trait.
- Proximity bias: Favoring employees closest to the manager.
- Confirmation bias: Seeking out information that confirms pre-existing beliefs or opinions about an employee rather than objectively evaluating their performance.
- Recency bias: Placing excessive importance on recent events or performance, overshadowing an employee's long-term track record.
To mitigate these biases in promotion processes, Vivian Acquah advises:
“It's important to consistently monitor and review the process to ensure it remains fair and unbiased. Unconscious bias training for managers can also be beneficial in promoting objectivity. By creating such a system, companies can ensure that promotions are based on competency, fostering a sense of fairness and inclusivity in the workplace.”
11. Communicate Promotion Decisions
Communication between managers and employees must be clear, open, and honest. If someone isn't selected for a promotion they applied for, explain the reasons openly and clearly. This builds trust and clarity, giving employees a better understanding of what's required to earn future promotions. Ensure your communication is:
- Timely: Delaying feedback can lead to frustration and uncertainty among employees.
- Clear: Emphasize that promotion decisions are primarily based on an employee's performance, skills, and organizational contributions.
- Inclusive: Highlight how the promotion process supports equal opportunities for all employees.
- Data-driven: Include data and performance metrics to support promotion decisions, demonstrating that evaluations are based on objective criteria.
- Positive: Recognize the efforts and achievements of all employees, not just those who were promoted. Celebrate successes and contributions to create a positive and supportive work environment.
Recognize And Reward Your Employees With Nectar
Recognition is an integral part of any organization's success. It motivates employees, creates positive vibes in the workplace, and encourages ongoing performance. But promotions at work are just one way to recognize the accomplishments and contributions of your employees.
Nectar’s Recognition tool encourages all employees to offer praise and shoutouts to their peers in the Nectar feed, accompanied by Nectar points they can exchange for Rewards like Amazon products, gift cards, company swag, charity donations, or customizable rewards. By doing so:
- 94% of companies see an increase in employee engagement
- 89% of companies maintain a healthy remote work culture
- 91% of companies experience a boost in employee morale
Ready to incentivize your employees to remain loyal to your company, achieve more at work, and set them on a path of continuous growth and development? Book a free Nectar demo today.