Businesses who value the work their employees do, but are strapped for cash, may have a dilemma on their hands if they are looking to retain their key employees. Our first thought, as business leaders is often to reward and give increased responsibility to high-performing employees. In tough times though, it may not be feasible to “reward” those employees. Does it therefore make sense to promote without giving a raise and make up for it at a later time?
Organizations have used the practice of promoting without rewarding in challenging times, but as Paul Lopez explains in an article in the Wall Street Journal on March 2, 2012, employers should document why they decided to give a promotion without a raise for every employee; not to mention they should also explain it verbally to the employees so they are kept fully aware of the reasoning behind it:
“…it is important for you to communicate why no raises are forthcoming even though your employees are promoted—whether that’s because your industry overall is down, or whether because there are specific issues in your company that have caused a slowdown, such as losing a key contract or customer, or because a big client hasn’t paid its bills.This will not only make the employees feel as if they are truly a part of your team but, importantly, if and when the employees are asked about the salary freeze they will be in a position to tell anyone asking—including a plaintiff’s lawyer– the legitimate reasons why.”