By Tony
Deblauwe
Kevin Fogarty of TheLadders posted an
article, “Should You Trade Salary for a Bigger Title?” It was an interesting piece
especially in light of low merit pools for 2010. Many companies are still de-thawing
from pay freezes, and are barely able to catch up to the increase of cost-of-living
changes let alone external competitive pressures in financial packages for key talent.
The question is - do titles alone, in the course of a promotion, hold enough currency
to be worthwhile?
While
Fogarty’s angle was more about getting ahead in one’s career through sacrificing
salary to advance, the reality is, this choice may be the only one employees
have. Many managers concerned about development and growth opportunities, but
lacking pay and stock budgets, use the “hollow” promotions as a recognition and
retention tool. The manager hopes that later in the year, an out-of-cycle pay
increase can occur and by year-end, the employee is squared away.
This approach
often fails. A more likely scenario - an employee is asked to “earn” the promo,
with more work and scope, but nothing else. Is the title motivation enough to
work harder or differently in this case? Unlikely. Many hollow promotions turn
out to be resume builders and people leave. There’s a price to be paid on the
organizational model as well. The more artificial promotions you use in replacement
of standard increases bogs up the top line. Team leads want to be managers, the
managers want to be directors, and so forth. Everyone wants to be in a senor
level role but the organization cannot support it. The potential risk of forging promotions because
there is no money, versus the risk of the hollow promo with an equity alignment
later, is the rock and a hard place argument.
So what
do managers do to circumvent this cycle while maintaining engagement and commitment?
That’s the tricky part. Cleary if no money exists and the company has to cut
back, there isn’t much you can do. You can try to stagger out payments – give a
piece now - give piece several months from now. See if the employee is open to
other rewards that are not base pay oriented. It depends on the person and the situation
of course, but managers have to associate a promotion with recognition and
advancement, but also decouple rewards with a pure money play. In some cases the title change and promo is
enough but it buys short term commitment.
What practices do you think work best to help avoid the hollow promotion?
