Dry Promotions: Boost or Bust for Employee Engagement?

Recently, a friend introduced me to the concept of “Dry Promotions.” Her organization has been pushing for a higher number of dry promotions over the last six months. While not entirely new, this concept—where a job promotion entails more responsibilities but no increase in pay—has not been widely utilized until recently. I was curious to understand why organizations would use this tool and whether it truly helps improve employee engagement and retention.

Insights from Research Studies

Gallup published a study highlighting that one of the most important factors in creating a high-performance workplace is instilling a high-development culture, one that values the growth of individuals. Organizations that have made a strategic investment in employee development report 11% greater profitability and are twice as likely to retain their employees.

It makes sense. High-achieving people, the ones who can grow your company, seek development. Employees have a psychological need to learn and grow, which satisfies two of the five essential elements of wellbeing: career and social wellbeing. Having a sense of purpose makes people feel great about their work and helps them enrich and deepen their relationships outside of it.

Other studies, such as those by HBbrain.ai, show that 86% of employees consider career development opportunities important. The International Association of Workforce Professionals found that 74% of Millennial and Gen Z employees are likely to quit within the next year due to a lack of skills development opportunities.

These insights s make it evident that employees today value growth and see it as a measure of career success, while employers want to keep their top talent engaged and retained.

How Do Dry Promotions Create a Win-Win Solution?

To explore this further, I spoke with several HR and business leaders and added my perspective to the mix. This article does not address whether dry promotions are a good and fair concept. Instead, it will help you weigh the pros and cons to decide whether this strategy fits your organization's business and cultural needs.

Advantages:

• Opportunity to Learn New Skills: An individual contributor who was recently promoted to a people manager position shared that dry promotions involve more responsibilities, allowing employees to tackle bigger challenges and learn new skills which may not exist in their current role.
• Job Titles: A couple of employees from an e-commerce company shared that these promotions include a change in job title, which can increase an employee’s influence and authority in hierarchical organizations, improving overall effectiveness and efficiency.
• Marketability: A recently promoted business leader shared that employees with new titles often find their LinkedIn profiles receiving higher engagement from hiring managers and recruiters, opening new career opportunities even without an immediate pay increase.
• Cost-Effective: Dry promotions are less expensive for companies as they don’t involve pay increases. However, one HR leader shared that their organization is offering alternative benefits like equity or bonus targets to improve engagement and retention.

Potential Drawbacks:

While there are some advantages, dry promotions can also lead to resentment if not handled correctly, impacting employee morale, productivity, and retention. In the age of social media, there's also a risk of reputational damage for the company.

How to Make Dry Promotions Work:

If your organization must offer dry promotions due to budget cuts or other factors, here are some ways to address the adverse effects:

• Transparency: Share the true reasons behind offering dry promotions and articulate whether this is a short-term change and how employees will be compensated for their additional work.
• Offer Alternate Benefits: Provide benefits like more flexibility, additional time off, or equity and bonus increase to show good intentions and fairness.
• Career Progression: Discuss how the new role will help employees progress in their careers, potentially leading to a significant pay increase when feasible.
• Acknowledge Exceptional Performance: Spend ample time recognizing the good work employees have done and how it positively impacted organizational goals.

What are your thoughts on dry promotions? Have you experienced them in your organization? Share your experiences and insights in the comments below. Let’s discuss how we can navigate this and create a safe space for all opinions.