Research reveals new trend: employees are willing to take a promotion without the cash benefit.

You might expect that a promotion, along with heightened responsibilities, would also include a salary increase. Makes sense, right? More work, more money. But a recent study shows that this isn’t always the case.

Nearly two in five HR managers surveyed said it’s common practice for their companies to offer promotions to staff without a financial incentive, the research says. What’s more surprising is the fact that nearly two-thirds of employees were willing to accept a promotion without a pay increase.

Why young people are accepting a rise without a raise

On average, employees are likely to receive a promotion when they reach the two and a half year mark in their role. After this time, you might expect to receive more of that cold hard cash, especially when you consider the average job tenure in Australia is just under three and a half years. But Robert Half’s research suggests that the opportunity to advance in the career ladder may be enough of a deal sweetener for some, especially for those on the younger end of the workforce.

Workers aged 18 to 34 are most willing to accept a new title that doesn’t include a raise. Speaking to HRM, Andrew Morris, Director of Robert Half Australia, says: “We’ve found many millennials in the workplace make their career aspirations clear when it comes to employment choices, and interestingly financial rewards are not always their top priority”.

“They thrive in a flexible and transparent workplace with open lines of communication across the business and they look for professional development programs which ensure their needs for career advancement are met. A promotion or more senior job title is a clear sign of confidence in an employee – so it isn’t surprising that millennials value career progression and the chance to prove themselves over a higher salary.”

James Hancock, Business Director at consultancy firm mwah, Making Work Absolutely Human, echoes Morris’ point.

“Younger employees are establishing their careers and taking on a promotion or increased responsibility is a way of them showing they are capable at performing the role or task at hand before demanding more pay.”

Show me the money

Karen Gately, Director of HR consultancy firm Ryan Gately, offers a different perspective, “I think there would be a few reasons that younger people might be more willing to take on promotions without a pay rise. One being that they want more experience. They’re willing to sacrifice more to get ahead. I also think there is an element of naivety. Workers who’ve been around the block a few times might be more comfortable asking for what they’re worth, whereas younger employees might be less aware of the need to negotiate harder.”

The research also found that male employees were more likely to jump at the opportunity than their female colleagues. Gately suggests this could come down to a lack of confidence from female workers.

“There’s a lot of research around men being more inclined to be confident in backing themselves. They might look at a promotion opportunity and while it doesn’t mean more money in the short-term, they may be able to see the potential to turn it into more money in the near future. Women are more likely to be conservative in that regard, they might want more certainty when it comes to being offered a promotion.”

Why are organisations doing this?

Expecting a staff member to take on additional work responsibilities without offering some kind of incentive, financial or otherwise, raises some ethical concerns. Gately says this is not a black or white issue, noting that smaller businesses might not have the capacity to hand over more money, however, she says “in my view, if someone has been working in an organisation for a period of time and they’re asked to take on greater accountability and responsibility, I’d think there should be compensation that comes along with that”.

Previous research suggests that the key reason for promoting without a pay rise is to assess an employee’s performance before deciding whether to offer a pay rise for a future promotion. If staff are willing to bite the bullet and put in the hard yards in the short-term, they will be rewarded in the future – maybe.

Morris says that in order to retain staff, employers need to review salaries regularly and ensure they are above, or in line with, industry standard if they want to retain their staff. He added that communication is key. If employers aren’t offering an increase in salary with a promotion, they need to clearly communicate why this is the case and potentially offer an alternative incentive such as flexible work arrangements, time in lieu or training opportunities.

“While some workers may be more motivated by a senior job title and more complex job duties rather than just more pay, it’s still essential for employers to still reward their staff accordingly. Accepting a promotion without a pay rise is a personal decision. And yet, one of the main reasons why people change jobs is to secure more pay,” says Morris.

Referring to the shifting environment of most workplaces, including low wage growth, tough operating budgets, digital disruption and transformation, Hancock says: “the chance for professional development and skill diversification is really important. Is development enough? This is in the eye of the beholder, but there must be a balance between doing the right thing and paying people more for increased responsibility”.

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