Promotion without pay commonly considered in financial sector
New research from Robert Half UK reveals securing promotion is no guarantee of a pay rise, as 94% of finance professionals would elevate an employee into a new role without offering any additional remuneration.
The primary motivation (42%) for chief financial officers (CFOs) and finance directors (FDs) promoting employees without offering a pay rise is because they believe employee performance in the new role needs to be assessed first, found the research.
For finance and accounting professionals in some companies, it appears promotions are being used as a tool to motivate employees when additional money isn’t available to pay them. The second most cited reason for promoting without a pay rise is a lack of available financial resources (27%). The speed required to fill a vacancy (18%) was also identified as a reason for not having funds available to offer employees more money. One in ten (9%) CFOs and FDs have promoted employees without increasing their salary because they thought the employee’s remuneration was too high for their previous position.
Employees working in finance and accounting are most likely to be successful if they make a case for a higher salary during their performance review (36%). Making a request at a business critical juncture can also be an effective strategy, with 28% of FDs and CFOs recommending the best time to ask is at the start of a major project or when taking on new responsibility. One-in-ten (11%) believe the best time to request higher remuneration is at the end of a major project. The major factors behind firms being in a position to increase their budget for employee remuneration are company performance (50%) and the economic and political climate (30%).
Phil Sheridan, senior managing director of Robert Half UK UAE and South America, commented, “Offering your employees increased responsibility and the opportunity to learn and develop can be one way to boost your employee retention, loyalty and motivation, even when the funds may not be available for a pay rise. The risk with this approach in the long-term is that employees start to feel undervalued and with the new skills they have developed, they look to greener pastures to receive a competitive remuneration. If companies do adopt a promotion first strategy scheduling a six month performance review when salary and benefits can be discussed at the same time as confirming the promotion, can be an effective strategy to avoid a negative outcome.”
If employees ask for a pay rise and do not receive one, CFOs and FDs report they are most likely (30%) to request other perks instead, such as new training options. The reseach findings also noted that when declining a request for a pay rise, finance professionals should consider whether they are willing to lose the employee.
More than a quarter (27%) of CFOs and FDs report employees who are turned down for a pay rise immediately start searching for alternate employment. A further 23% of these finance professionals say employees will usually wait for their next performance review before requesting a rise again.