Dry promotions. The pros and cons.

Getting promoted is generally an exciting time. It’s a recognition that hard work, talent and commitment are paying off. However, an element of that excitement probably comes from the increase in pay that comes with the promotion. Now though, an increasing number of employers are offering ‘dry promotions’, a job advancement or change in position that doesn't come with a salary increase or a significant change in substantive benefits.

A recent report by compensation consultant Pearl Meyer showed that 13% of employers chose to give their employees new job titles instead of a raise, an increase from 8% in 2018. Another survey of 900 companies from benefits-advisory firm Mercer discovered that more employers are allocating less of their 2024 salary budgets to promotion-related increases than in 2023. 

Dry promotions can happen for various reasons, such as organisational restructuring, a reduced budget for pay increases, or as a temporary measure to recognise someone's potential or contribution while awaiting more substantial changes. They of course come with pros and cons which vary depending on specific circumstances and individual perspectives.

From an employee perspective it’s a recognition of their skills, accomplishments, and potential for growth within an organisation and something that may enhance their long-term career prospects by offering opportunities for skill development, networking, and exposure to new challenges and responsibilities. The most obvious downside is the lack of immediate financial reward. Without a salary increase, an employee may feel undervalued or frustrated, especially if they were expecting a raise with the promotion. There may also be perception issues with peers and subordinates, who perceive a dry promotion as hollow or lacking in substance.

Employers benefit by retaining talented employees by demonstrating that the organisation values their contribution and is willing to invest in their career growth which can assist in raising morale and motivation. A dry promotion may also be part of a strategic plan to position an employee for future advancement or to fill a critical role in the organisation once resources become available. However, if an employee's expectations for a promotion includes a salary increase or other benefits, a dry promotion may lead to disappointment and demotivation and, if they continue to feel undervalued or see no prospect of advancement in the future, they may ultimately choose to leave the organisation.

Overall, while dry promotions can offer some benefits in terms of recognition and career development, they also come with potential drawbacks related to financial considerations and employee morale. It's essential that organisations carefully consider the impact of such promotions and communicate effectively with employees to manage expectations and maintain engagement.