Can you promote without increasing pay?

The majority of Kiwi CFOs don’t seem to have a problem with the practice but one industry expert says it’s a risky move.

Can you promote without increasing pay?
Promoting an employee without giving them a pay rise might sound a little mean spirited but – according to the overwhelming majority of Kiwi CFOs – it’s perfectly acceptable in the workplace.

In a recent study, an incredible 89 per cent of New Zealand’s CFOs said employees shouldn’t necessarily expert a pay rise just become they’ve been promoted – it may be a popular approach but one industry expert says it’s certainly not risk-free.

"If an employee is promoted, it's a clear sign that their company has confidence in them and the work they are doing,” said Andrew Morris, director of Robert Half New Zealand.

“But if they are expected to take on more responsibility and more complex tasks without receiving an increase in salary, this can have a negative impact on their motivation,” he added.

Understandably, 41 per cent of the CFOs said employee performance in the new position must be assessed before a pay rise was agreed upon but Morris stressed the importance of setting a review date well in advance.

"Employers need to offer clear guidelines on when their salary will be reviewed together with firm benchmarks that need to be attained in order for the employee to enjoy a salary uptick,” he advised.

For a significant number of CFOs – 23 per cent – cited a lack of financial resources as the main driver behind failing to bump pay but Morris said there were still other avenues to explore which could compensate employees for their added work, such as flexible working and loyalty leave.

"It is also important for employees to remember that the challenge of a more responsible role can deliver long-term career benefits which can compensate for the lack of an immediate pay rise,” he added.

A further 12 per cent of CFOs said the role was filled as a matter of urgency which meant there was no time to consider remuneration but – whatever the reason for keeping pay the same – Morris said it was important to keep employees in the loop.

"A pay rise can be a highly effective staff retention tool especially when employees are asked to take on additional responsibilities, and if they don't receive a pay rise at that time then it is important to explain to them why not,” he stressed.

CFOs might be happy to offer promotions without pay rises but are you? Share your thoughts below.

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