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Promotions, salary hikes and training are necessary to retain good employees
- Taken-for-granted feelings among workers need to be minimized. Offering a step up when an employee already has one foot out the door does little for employee retention.
So, you finally got that promotion you pushed for. What’s next? A new job, according to a recent study by the ADP Research Institute. According to the payroll services provider’s report, which examined 1.2 million workers in the US between 2019 and 2022, 29% of employees quit their employer within the month after getting their first promotion at the company, compared with only 18% of similar, non-promoted workers, a gap that endured for about six months. The effect was especially strong for managers. Employers should take this as a splash of cold water in the face—they are getting promotions wrong, and losing the very people they most want to keep.
The study’s explanation leans heavily on the idea that getting a promotion increases a person’s perceived value—a shiny new title could lead to more calls from recruiters. That’s certainly a possibility. But I wonder if the kinetic force expelling newly promoted workers is less of a pull and more of a push. In other words, a recruiter’s siren song is less to blame than the frustrating promotion practices at many companies. By the time the long-desired new title is awarded, the employee is so fed up they have one foot out the door.
Too many organizations only green light a step up when an employee has a written offer from a rival. This does not inspire loyalty. Employers who string along ambitious employees with promises of advancement and opportunity, but only follow through when those workers get an outside offer, are setting themselves up for disappointment.
Companies also bungle the promotion process when new managerial responsibilities are unaccompanied by additional training. Yet, a majority of new managers don’t get leadership training until they’ve been doing the job for years. Many learn by watching their own bosses—who often model bad habits. The result is that an employee who felt confident and competent in her old role might feel she’s been left to sink or swim on her own.
Lack of training is compounded by lack of time, with mid-level managers expected to be ‘player-coaches’ who both do the work and supervise it. It can be deeply disillusioning to realize that on top of taking on a raft of new tasks, you’ve got to somehow keep doing the old ones. That’s a recipe for burnout.
Then there’s money. It can be harder to get a significant raise with an internal promotion—when your value has been proven through years of devoted service—than to get a raise by switching companies. The last couple of years have been especially good to employees who were willing to jump ship. And many HR departments have rules limiting the percentage increase an employee can get, even with a promotion.
This can make loyal employees feel like chumps for sticking around, especially if they’ve gotten a bigger title without the benefit of a bigger paycheque. In one survey, almost 40% of companies said they regularly gave promotions without raises.
In a much-cited paper, Matthew Bidwell, a professor at the Wharton School of the University of Pennsylvania, found that external hires got paid 18% more than newly promoted internal candidates, even though external hires initially performed worse as they got up to speed.
Before you rush to dust off your resume, Bidwell warns that external moves can be a bit of a double-edged sword. In the short term, new jobs bring more money—but they can also make future raises and promotions slower to arrive.
It’s lower-paid people who have the most to gain from changing jobs, Bidwell says. Analysts at Bank of America found earlier this year that for workers making less than $25,000, switching jobs netted an average increase of 35%.
This meshes with the analysis by ADPRI, which found that newly promoted workers were especially likely to leave jobs that require fewer qualifications. Say, for example, that you work as a barista, earning $15 an hour. You’re organized, you’re on time, you’re pleasant to be around—congrats! You get promoted to shift supervisor. You take on a raft of new responsibilities— opening and closing the store, counting the cash, managing inventory and covering any sudden absences—as well as continuing to make lattes. But it’s all worth it, because you’re now earning… $17 an hour? That doesn’t compute. Of course you’d look for a new job.
There are important lessons here for employers. But the biggest may be this: Take promotions seriously, especially promotions to management. Reward employees not only with a new title, but with the training and support they need to succeed—and a salary that reflects their new role. Especially if they weren’t earning very much before. ©bloomberg
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Business NewsOpinionViewsPromotions, salary hikes and training are necessary to retain good employees
First Published:2 Nov 2023, 12:33 PM IST
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