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Compensation & Rewards

Everything you need to know for successful employee promotions

Leapsome Team
Everything you need to know for successful employee promotions
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In a fast-growing and dynamic organization, workloads increase and responsibilities change quickly. This means that, to meet the demands of their roles, employees must upskill and specialize; this creates a surfeit of positions to fill and talent to find challenges for.

And it only seems natural for human resources and people ops professionals to consider internal candidates for new positions. Employees expect promotions and want to be rewarded for their hard work and commitment. What’s more, 7 in 10 employees say that job fulfillment is essential to their happiness at work.*

Promoting an existing employee may seem like a great way to solve two problems in one move — but choosing the wrong candidate can cause complications. A bad promotion decision can be frustrating for your company and employees, wasting an opportunity to help the right person grow and develop their skill set. 

Employee promotion requires the utmost care and attention. That’s why we’ve consolidated everything you need to know for promotion management in this article, and after you’ve become an expert in handling promotions head over to our article on the best ways to announce promotions. We cover promotion types, the benefits of promoting employees, when to promote them, and what to consider for employee promotion best practices.

*PwC, 2022

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What is employee promotion?

Employee promotion is when a company raises a member of its team to a higher or more specialized position.
Promotions usually involve one or more of the following: 

  • Pay increase
  • New title
  • Changes in job responsibilities
  • More decision-making power
  • A leadership role
  • Specialization

Promotions are also a huge motivator for employees. People connect promotions to recognition, career growth, and job satisfaction. Pay increases mean extra economic security, too.

Types of employee promotion

There are three main types of employee promotion: vertical, horizontal, and dry.

Vertical promotion

Vertical promotions give employees more or different responsibilities, a higher salary, and a new job title. This is what most people imagine when they think about promotions. 

Vertical promotions are an excellent way to recognize high performing employees and fill vacant positions that can benefit from an internal perspective. They also signal to your people that the company values their career growth.

Horizontal promotion

Horizontal promotions mean a pay raise and a new job title but no change to the role itself. These promotions work well to reward tenure, acknowledge new qualifications, and boost retention. For example, horizontal promotion is a common practice in universities — in many institutions, lecturers become senior lecturers after five to seven years.

Dry promotion

Dry promotions are as bad as the name suggests. This is when an employee receives extra responsibilities, but nothing else. Avoid them at all costs. They chase away employees by making them feel undervalued and unappreciated, and are not a people-oriented practice.

Open vs. closed promotion

All the promotion types above fall into two categories: open and closed employee promotions. 

Anyone can apply for an open promotion, provided they meet a position’s requirements. Human resources will email every employee or put the job ad on the company’s career page. On the other hand, closed promotions are only open to select employees (based on experience, qualifications, or skill set). These candidates will receive individual messages prompting them to apply.

Choosing an open or closed promotion model for a role depends on your business practices, company values, and the position itself. Open promotions are suitable for a vast pool of potential applicants — for example, an organization with 500+ employees with transferable skill sets. Closed promotions help you narrow the search when you have ultra-specific requirements. They can make finding the right internal candidate more time efficient.

Photo a three professionals having a meeting
Closed promotions can simplify your search for the right internal candidate

Benefits of promoting employees

Employee promotions bring countless benefits to your organization.
They’re an investment into your company culture and people’s development. Here are just a few of the advantages:

1. Retaining your best talent & reducing attrition

Employees expect upward movement within their first years working for an organization. If this doesn’t happen, they may not feel valued and start looking elsewhere. 

Employee promotions are a great way to hold onto your star players and keep employee turnover low. According to research published by LinkedIn, after analyzing 32 million employee profiles, around 70% of workers who get promotions are still at the same company after three years — but only 45% of employees who don’t get promotions hang around.

If you haven’t already, introduce career development talks into your company. These are 1:1 meetings that focus on employee goals and aspirations. Career development talks are great for catching employees who want to transition into a different role early on.

2. Saving money

A recent report broke down the cost of hiring a new employee, estimating that hiring externally can total as much as US$17,000 per person in 2022. 

Employee promotion isn’t free, but it does slash these costs. You won’t need to worry about expenses like job listings, background checks, and general onboarding training.

3. Boosting motivation & productivity

You now know that studies link employee recognition with job satisfaction. But did you know that an employee promotion announcement has a cumulative effect? New employees watch their team members get a promotion and see their own possibilities for career advancement. This has two major advantages for your company:

  • Promotions encourage people to work harder, as they know it’ll pay off in the long term 
  • Fewer employees will actively job hunt when they’re optimistic about moving into a higher position 
⭐️ Be sure to celebrate promotions and successes. It advertises the possibilities for progress within your company to other employees.

Photo of three employees having a conversation in a break room
Employee promotion announcements boost everyone’s morale

4. Investing in career growth

The longer people work for your company, the more value they add. Each passing year, employees gain expertise, knowledge, experience, and rapport with clients. When you help talent rise through the ranks, you ensure that skilled experts fill key roles in your organization. 

Ensure everyone’s on the right path and feels good about their professional growth opportunities by asking managers to set up recurring one-on-one meetings with each of their reports. 

⭐️ Use one-on-one meetings to get to know your employees better. We have plenty of templates to give you a great jumping-off point for a productive discussion!

5. Creating employee ambassadors

LinkedIn feeds are full of career success stories. When people share professional wins, many just want to celebrate their good news and update their online resumes. But in doing so, they also become company ambassadors. They’re saying their company is a great workplace — an organization with mobility, growth opportunities, and job satisfaction. If you encourage employee promotion, expect good publicity.

When to promote employees

Now, let’s tackle the promotion process itself — it begins with deciding when to promote. Companies are all different, and there’s no one-size-fits-all approach. But here’s a list of things to look out for when considering your company’s individual needs.

Give employees a promotion based on meeting these promotion criteria:

  • Consistently perform well
  • Willingly take on additional responsibility
  • Master new skills related to their position 
  • Consistently display emotional intelligence
  • Show an interest in developing new skills
  • Adopt informal mentor roles for other employees
  • Exceed clients’ (or internal) expectations
  • Contribute to company growth in measurable ways
  • Have been in their current position for a sufficient period
🚀 Want to streamline your employee promotion process?

Leapsome has everything you need to help you automate your workflow and promote your people.

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What to consider for employee promotions

The final piece of the puzzle is what to look at when planning an employee promotion. Examine performance reviews, peer feedback, and how well a candidate fits into (or adds to) the company culture. This will show you how many boxes they tick in the list above. Ideally, use several evaluation methods for a comprehensive employee overview.

Performance reviews

Start by looking at the employee’s performance reviews. If you have all their files, check their performance since onboarding. Employees don’t need a perfect record, but they should show consistent improvement.

Streamline the promotion process and integrate a development framework into your company. People enablement software like Leapsome lets you and your employee set goals collaboratively and measure progress over time.

📈 With a people enablement tool like Leapsome, you can easily access past performance reviews and visualize each employee’s development over time!

Photo of two professionals having a one-on-one meeting in an office
Use different frameworks to review candidates for promotion — like performance reviews, peer feedback, and company culture

Peer feedback

Don’t make promotion decisions solely based on manager feedback. To build a well-rounded picture of someone’s performance and contributions to the company’s culture, gather peer feedback and feedback from reports (if applicable). This will help you determine if the employee shares responsibility (and the credit for a job well done!) with their team. 

Invite other people, like clients and managers, for a 360 employee review.  Check our step-by-step playbook on how to run 360 performance reviews for a more detailed guide.

💡 Doing performance reviews is time intensive — schedule and automate your assessments for a speedy process with Leapsome.

Everyone answers online, and you have everything you need for a fair evaluation.

Company culture

Company culture often gets overlooked, but it’s a crucial part of the hiring process — and a great indicator of an employee’s future with your company. For example, a high-performing and well-regarded employee might not be a cultural fit. So, ask yourself:

  • Do their values align with the company?
  • Are they helping to grow the company?

Perfect your promotion processes with Leapsome

As you can see, many factors play into employee promotion. It’s not a simple matter of having an open position and finding someone to fill it. You must consider the type of promotion you’re offering, who to offer it to, and how it will enable the employee to grow.

Employee promotion is also time intensive, and you need to make informed decisions. That’s where Leapsome comes in!

Our promotion management tool will help you automate processes with easily customizable and scalable workflows, so you can perfect how you promote your people — no matter the size of your organization.

🚀 Build trust with Leapsome’s promotion tool

Leapsome’s promotion tool lets you build a fair and transparent promotion process.

Book a demo

Written By

Leapsome Team

Written by the team at Leapsome — the all-in-one people enablement platform for driving employee engagement, performance, and learning.
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