Promotion or Pay Raise?
A recent survey finds a majority of professionals want a promotion over a pay raise, but experts differ on whether that's actually the case.
By Tom Starner
What do employees covet more: promotions or pay raises?
In a recent survey of 1,200 global professionals, more than half (63 percent) say they'd rather get the promotion.
The poll, from the Los Angeles-based global advisory firm Korn Ferry, found that the majority would prefer to get a promotion with no salary increase over a salary increase with no promotion.
"Study after study shows the incredible importance of recognition for one's contribution is a key driver in job satisfaction, while salary is rarely near the top," says Dennis Baltzley, a senior partner and the firm's global head of leadership development. "To retain the best and the brightest, organizational leaders need to put development and clear career pathing plans in place, not just for top leaders, but for those across the organization."
According to the survey, many organizations are not doing enough to create clear advancement opportunities for professionals. More than half (56 percent) of respondents who did not get a promotion within the last 12 months cited "bottleneck or nowhere to go" as the main reason. Nearly one-fifth (19 percent) said office politics got in their way of moving up the ladder.
Also, 84 percent said that, if they were passed over for a promotion, the top action they would take would be to identify the reason and work to improve. The vast majority (88 percent) said that if they wanted a promotion, their top action would be to have a conversation with their boss and identify growth areas that would enable them to move into the next role.
"The last thing any boss wants is to have an employee demand a promotion or lament that they were not chosen for a role," says Peter Keseric, a managing consultant at Korn Ferry Futurestep, one of the firm's three main divisions. "Conversations should start early on and include details on the exact key performance indicators that need to be achieved to earn a promotion, and there should be regular meetings to ensure progress is being made."
According to the survey, when asked, on average, how long they should stay in a role before being promoted, the top response (38 percent) was 2-3 years. Five percent of respondents said they expect to be in a role for a year or less before being promoted.
"The key is ongoing development and feedback to ensure the professional is ready to take on added responsibility in a role," Baltzley says. "And as this survey shows, knowing that a promotion is a possibility is an excellent way to retain top talent."
When Korn Ferry received the results of this study, Baltzley says, they went back and looked at past surveys the firm has done to evaluate what motivates millennial, Gen X and Baby Boomer professionals. The firm found that all generations rank income toward the bottom in terms of factors that drive them.
"The best HR leaders we work with understand that recognition for a job well done is critical to retaining top talent," Baltzley says. "A promotion is a tangible way to say 'I recognize your work, and the role you play here has meaning and is central to our success.' "
Sandra McLellan, the North America practice leader for rewards at Willis Towers Watson, says the importance of career development in retaining and engaging employees cannot be underestimated. Yet, WTW's Global Workforce Study found career advancement opportunities, including promotions, to be the No. 2 reason employees stay with their employer, with base pay as the No. 1 reason.
"However, career development cannot sit in isolation, but rather should work in combination with other aspects of the total-rewards package that resonate and ultimately retain employees," she says.
McLellan says to consider, for example, the fact that "job security" is reported as a top driver of employee retention in an age where traditional job security is considered a more difficult promise.
"If we probe how employees define job security today, we often find they are referring to job and career opportunities that help keep their skills and experiences relevant," she says. "In this context, we might say that ensuring 'career security' is the new job security."
While salary remains the top driver of retention, many employees recognize that keeping their skills and experience fresh through career advancement will drive their base pay opportunity over the longer term, she says.
"The question for HR and ultimately managers is: how are they bringing to life these opportunities through not only promotions, but also how work and development opportunities are designed?" McLellan says, adding that the combination of factors that drive employee retention also makes it evident that traditional approaches to base pay programs may be woefully out of date.
"The trade-off decision that employees may be willing to make in a given year between base pay, flexible opportunities and career development suggests the notion of an 'annual' base salary increase cycle needs to be revisited," she says.
McLellan adds that employers, and especially HR, need to be more savvy in understanding the capabilities that will propel their organizations forward, and designing work and promotional opportunities that help employees keep their skills relevant in the marketplace.
"The goal is to ensure that the sum of the total rewards offer and the employee value proposition can be customized in a way that is more valuable to the employee than the individual parts," she says.
Billie Blair, an organizational psychologist and president and CEO of Change Strategists, an international management consulting firm in Murrieta, Calif., says her experience doesn't reflect the survey's "promotion over pay raise" trend showing up in the large corporations she serves as clients.
"I do agree though, that career paths should be devised for professional employees," she says. "We tell our Fortune 500 clients that, if they are not developed, professionals [who are costly to recruit and acquire] will leave."
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