What is a dry promotion – and how can HR handle it?
You’ve been working tirelessly, consistently going above and beyond in your role. One day, your hard work is recognized with a promotion—congratulations are in order! But then you hear the catch: there’s no pay raise to go with your shiny new title. This scenario, known as a "dry promotion," is becoming increasingly common in today’s workplaces.
While it can be disheartening for employees, HR has a critical role in transforming this potentially negative experience into an opportunity for growth and engagement.
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What goes wrong?
Recent data from ADP highlights a concerning trend: 29% of employees who receive a promotion end up leaving their job within a month, compared to only 18% of those who weren’t promoted.
A key reason behind this, according to the Wall Street Journal, is the growing prevalence of “dry promotions,” where employees are given new titles without a pay raise.
The percentage of companies using this tactic has grown by 5% since 2018, reaching 13% in 2024. These promotions enhance employees’ market value, prompting them to seek better opportunities elsewhere.
This approach illustrates a costly mistake: companies attempt to save on salary expenses, only to face greater losses due to increased employee turnover.
Dry promotions happen for a variety of reasons, and understanding these reasons is the first step in addressing them effectively.
One of the most common causes is budget constraints. Companies may genuinely want to reward employees for their hard work but simply don’t have the financial resources to offer a pay increase.
In these situations, a title change without a salary bump is seen as a compromise—a way to acknowledge an employee’s contributions without straining the budget.
Another reason dry promotions occur is as a tool for employee retention. Organizations might use a new title as a way to keep talented employees from leaving for a more senior role elsewhere.
It costs nothing to give someone a new title, but it could prevent the expense and disruption of having to replace a valued team member.
However, while the intention might be positive, the outcome isn’t always so. Without additional compensation, these promotions can feel hollow and may even lead to resentment.
Finally, some companies might offer dry promotions as a form of employee recognition. They want to show appreciation for an employee’s hard work and dedication. But again, if the promotion doesn’t come with a pay raise, the gesture can fall flat. Employees may feel that while their work is recognized, it isn’t truly valued.
Proud but frustrated
Let’s talk about the real-world effects of dry promotions. Imagine being told, “We’re promoting you because you’ve done such a great job, but we can’t offer you any more money.” How would you feel? Probably a mix of emotions—proud of the recognition but also frustrated that your increased responsibilities aren’t matched by increased compensation.
This frustration can lead to several negative outcomes. First, there’s a significant risk of decreased morale.
Employees may start to feel undervalued, wondering if their hard work is truly appreciated. This feeling can quickly spread, creating a ripple effect that impacts team dynamics and overall workplace culture.
When employees see their peers receiving promotions without pay raises, it can lead to dissatisfaction and a sense that the company isn’t fair or supportive.
Another major concern is burnout. When employees take on more responsibilities without the corresponding financial reward, they may start to feel overwhelmed.
The extra work, combined with the lack of additional compensation, can lead to exhaustion and a loss of motivation. Over time, this can result in decreased productivity and, in the worst cases, talented employees leaving the company in search of better opportunities elsewhere.
Turnover is another critical issue. When employees feel they aren’t being fairly compensated for their work, they’re more likely to look for new jobs.
This not only leads to the loss of valuable talent but also creates additional costs for the company in terms of recruiting and training new employees. In the end, what seemed like a cost-saving measure—offering a dry promotion—can end up being more expensive in the long run.
The HR perspective: reframing dry promotions
So, what can HR do to mitigate these risks and turn dry promotions into a more positive experience? The key lies in transparency, communication, and creativity.
Transparency and communication: The first step is to be upfront with employees about why the promotion doesn’t come with a pay raise.
Honesty is crucial here. If budget constraints are the issue, explain the situation clearly and openly. Employees are more likely to accept a dry promotion if they understand the reasons behind it.
It’s also essential to manage expectations—make sure employees know that while they may not receive a raise immediately, there could be other forms of recognition or compensation down the line.
Alternative compensation strategies: Even if a pay raise isn’t possible, HR can explore other ways to compensate employees. This could include offering additional vacation days, flexible work hours, or opportunities for professional development.
Providing employees with the chance to attend conferences, take courses, or receive mentorship can be valuable in helping them grow in their careers. These benefits, while not financial, show employees that the company is still invested in their growth and well-being.
Another strategy is to create a clear path to future financial rewards. This could involve setting specific performance goals or timelines that, if met, would lead to a pay raise or bonus in the future.
By offering a concrete plan, HR can help employees see that their hard work will eventually be rewarded, even if the raise isn’t immediate.
Career development and growth opportunities: Dry promotions often come with increased responsibilities, which can be a double-edged sword.
On the one hand, they provide employees with the chance to develop new skills and gain valuable experience. On the other hand, without proper support, these new challenges can lead to burnout.
HR can play a vital role in ensuring that employees have the resources and support they need to succeed in their new roles.
This might involve providing additional training, offering mentorship programs, or ensuring that employees aren’t overwhelmed by their new responsibilities.
Building a culture of recognition and fairness
Finally, it’s essential for HR to foster a workplace culture where recognition is meaningful and fair. Dry promotions should never be seen as a quick fix or a way to avoid giving employees the compensation they deserve. Instead, they should be part of a broader strategy that includes regular feedback, open communication, and a commitment to employee development.
Encouraging a culture of recognition doesn’t just mean handing out titles—it means genuinely valuing employees for their contributions.
This can be achieved through regular performance reviews, opportunities for career advancement, and a focus on creating a positive work environment where employees feel supported and appreciated.