‘Dry promotion’: All about the appraisal trend offering higher designation without pay hike

“Despite prioritising rewarding performance with competitive compensation, strategic considerations like short-term financial realities, restructuring, or investing in high-potential employees can lead to dry promotions,” Ankush Sabharwal, CEO and Founder, CoRover highlights.

Even though most employees are not thrilled with dry promotions, this not-so-new appraisal trend has grown more prevalent in recent years, with more employers assigning less of their 2024 salary budgets for promotion-related hikes when compared to the previous year, as per Mercer.

How dry promotions impact the workforce and workplace culture

Although dry promotions may offer benefits to employers, here’s how they impact the workforce and workplace culture. (Source: Canva)

“A promotion with no salary hike is not a promotion. It is a demotion because you are being required to do more, with more responsibility, without getting compensated for it. If your company is doing this, it’s time to look for a new job,” expressed a Reddit user within the thread on ‘promotion but no salary increase.

While discussing dry promotions, Kriti Sachdev, a PR Executive, shared her thoughts. “While I recognise the appeal of this cost-cutting tactic to the companies, I strongly believe it’s a shortsighted move that will eventually backfire. Maintaining job satisfaction and morale rely on being content with one’s work and feeling adequately compensated for contributions. Taking on more responsibilities without a salary increase will lead to dissatisfaction and resentment.”

While the new title can initially be perceived as a recognition of one’s hard work, the lack of financial reward can quickly lead to disillusionment, especially when the increased workload begins to outweigh the perceived benefits of the new role.

“Once the initial boost of energy is consumed, the lack of financial recognition can lead to decreased motivation, deterring well-being, leading to chronic stress and burnout, and a sense of being undervalued, which will result in questioning their self-worth and the organisation’s commitment to fair practices,” Piyali Maity, Counselling Psychologist and Clinical Director for Counselling Operations, 1to1 Help, told indianexpress.com.

All this will eventually lead to a rise in turnover rates, as Nectar reveals that 33.63 per cent of the workforce will start looking for a new job due to a lack of career growth, making it crucial to navigate its negative implications and ensure employees feel valued and motivated.

How leadership can tackle complexities of ‘dry promotions’

1. Interviews and anonymous surveys to assess employee sentiments

Sonica Aron, Founder of Marching Sheep, proposed, “Stay interviews with high performers can uncover dissatisfaction with dry promotions before it escalates into disengagement, in addition to analysing anonymous employee satisfaction surveys, which provide a platform for honest feedback on compensation practices. This feedback loop enables us to assess employee sentiment, comprehend the effects of dry promotions on morale and retention, and refine our approach to ensure these promotions are reserved for truly exceptional circumstances with tangible benefits for both the employee and the company.”

2. Aligning with employee expectations and business goals

Ankush, however, proposed that “leaders must consider implementing opportunities for professional development, like training and mentorship programmes, along with public recognition for the employee’s increased contributions. Additionally, regular salary reviews, taking into account past performance, including dry promotions, clear promotion criteria, and soliciting employee feedback can help leaders continuously evaluate practices and align them with both objectives.”

3. Communicating with sensitivity and transparency:

“Handling the communication of a dry promotion with sensitivity is crucial to reducing negative impacts and fostering a positive reception. By being honest and transparent about the situation and highlighting the other benefits of the role, such as increased visibility and authority, we can mitigate feelings of unfairness, support the individual’s psychological needs, and strengthen their loyalty and engagement with the organisation,” Piyali shared.

In essence, while dry promotions may be an economic necessity in certain contexts, they require careful handling to ensure they do not undermine employee morale or retention. By understanding the implications of these promotions and striving to compensate employees through other means, organisations must focus on adaptability, transparency, and fairness as the key tenets of successful employee management and organisational sustainability.