Fewer and Smaller Promotions

With the underfunded salary budgets of recent years, a promotion may be the only way employees can earn pay raises. Yet even those are fewer and smaller, according to a survey released by WorldatWork.

The survey of 720 organizations found that, overall, 7% of the employee population received promotions in a typical year during the economic downturn, compared to an average of 8.1% in earlier years.

The average size of promotions has declined as well, though one employee group is feeling the pinch a bit more. While all employee groups: nonexempt, exempt, officers/executives: saw declines in their average promotional increases, officers/executives saw the biggest decline from 11.4% in 2005 to 9.5% in 2010.

The most influential factors in determining the amount of the increase are the pay range of the new position (cited by 66% of the respondents), the rates paid to other employees in similar positions (60%), and external pay data (36%).

A perceived lack of opportunity for career advancement and promotion can be demoralizing, especially to top performers, says WorldatWork. The study shows that organizations continue to plan for promotions and many even proactively budget for it separately from other pay increase budgets. Organizations ought to communicate and raise the visibility of promotions as one of the key elements of their total rewards program.

For the full survey: www.worldatwork.org/waw/adimLink?id=45914