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5 Tips for Creating an Employee Promotion Policy


An internal promotion is usually a sign that the employee has made noteworthy contributions to the company. However, dilemmas can arise if other employees regard the promotion as unfair or inconsistent with normal business practices. 

For example, promotions stemming from favoritism can trigger coworker resentment, or a discrimination lawsuit if the reason for the preferential treatment is due to a protected class such as gender, race or age. 

These issues can be mitigated by developing a promotion policy. Below are five suggestions for creating the policy.

1. State the Purpose of the Policy
Briefly describe your position on employee promotions and why the policy is necessary. You might say that your company believes in promoting from within, and the purpose of the policy is to establish guidelines that endorse this belief. 

2. Define Promotion
You might say that a promotion moves the employee to a more significant role in the company. Then, explain the basis for this escalation.  

Per a report by WorldatWork, 80% of organizations defined promotions based on higher-level responsibilities or an increase in pay grade, band or level.  

Note that although some employers offer promotions without a pay raise, "employees will usually not feel completely satisfied with a promotion unless there is a meaningful increase in base pay," according to the Society for Human Resource Management. 

3. Be Clear About the Eligibility Requirements
Any employee in good standing with the company should be eligible for promotion consideration, provided they meet the qualifications for the role. 

Employees should understand that promotion depends not just on external influencers — such as experience, education and technical abilities — but also on their personal ambition and attitude. For example, an employee who doesn't want a promotion, despite performing well in his or her current role, would not be suitable for advancement.    

4. Describe the Application and Approval Process
Questions to consider:

  • Which methods are used to communicate opportunities for advancement?
  • How long will promotion vacancies be posted internally?
  • What is the process when department heads wish to recommend one of their staff members for promotion?
  • When and how should employees apply directly through HR?
  • What are the procedures for promotions at the management and chief officer levels?
  • Who is involved in the approval process?
  • How long can an employee stay in his or her current role after being approved for promotion?
  • When and how will applicants who were not selected for promotion be notified? 

5. Communicate the Policy
According to SHRM, employers tend to under-communicate their promotion policies to the general employee population, and this could cause the organization to miss out on the chance to attract, motivate and retain employees. Along with creating the promotion policy, make sure you develop a communication strategy for recruitment and retention purposes.

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