Dry Promotions: Pros, Cons & 5 Ways to Handle Them

Congratulations — you got the promotion (or got the pleasure of giving it to a worthy employee).

The caveat: No raise.

It’s a dry promotion — promoting an employee without giving a pay raise — and it’s a growing trend in the workplace.

But dry promotions aren’t just an evil employees have to endure — or a cheap ego stroke HR pros and managers will feel like they have to hand out. They have pros to balance the cons.

Costs & Dry Promotions Rise

What’s interesting is that dry promotions aren’t new to the working world. But they’re on the rise as the cost of staying in business is up, and more companies are tightening the payroll belt.

In fact, many businesses will devote less of their 2024 salary budgets for raises tied to promotions, a Mercer survey found. In some cases, companies rely on job titles as the way to attract and retain employees.

“Where we see the most eye-popping numbers is in the significant effort to reward and retain employees through the use of titles,” says Rebecca Toman, vice president of Pearl Meyer, which recently studied promotions and pay raises. “Thirty-seven percent of respondents are actively applying titles as a way to retain key employees, which is up from 27% in 2018. Further, a third of those surveyed use titles to reward current employees and this is a 74% increase from pre-pandemic levels.”  

But let’s be optimists and look at the good side to dry promotions.

Pros of Dry Promotions

The most obvious pro of dry promotions is that they come as no expense to the company. But, really, if it doesn’t benefit employees, it’ll likely feel more like punishment than reward for most employees.

Promotions of any kind can help employees:

• increase their knowledge and skills
• widen their internal and external networks
• expand their responsibilities and capabilities, and
• introduce them to new challenges.

And a dry promotion done right should lead to a considerable raise when the company’s ledger allows for it.

“While title adjustments can be a meaningful form of recognition, they usually also come with more responsibility for the employee. When this occurs without an added financial reward, it can quickly lead employees to feel a sense of resentment – that they are being taken advantage of by their employer,” says Annie Rosencrans, Director of People and Culture at HiBob.

Thus, we need to explore the cons of dry promotions.

Cons of Dry Promotions

There are risks to dry promotions. While your intention may be to elevate an employee, the lack of dollars behind a promotion can cause resentment or worse.

Dry promotions have the potential to:

• discourage employees who’ve worked toward moving up and making more money
• lead to discontent as employees take on more work without more pay
• overwhelming employees with more duties without more rewards, and
• cause increased turnover.

Bottom line: Dry promotions can deflate egos, hurt morale and push people out the door.

Should You Make Dry Promotions?

Ideally, you shouldn’t make dry promotions.

“Dry promotions can cause employees to lose motivation to work hard and pursue further career advancement,” says Rosencrans. “This response can have ripple effects on your organization, resulting in decreased team morale and increased turnover. That’s why it’s crucial to compensate employees fairly and appropriately for their work.”

But, for many reasons — most of them financial — some companies will be forced to offer dry promotions this year.

Make Dry Promotions Work (When You Must)

Dry promotions wouldn’t be a topic we cover if they weren’t happening. So we get it: They’re necessary in some situations.

“It’s important to show employees that you recognize their contributions to the company and that you’re rewarding them in meaningful ways until a compensation increase is financially feasible,” says Rosencrans. “In this instance, it’s important to be as transparent as possible and give employees a prediction on when they can expect a raise, if applicable.”

So to make the best of dry promotions:

• Be transparent. Tell employees exactly why they aren’t getting a raise with the promotion. If the funds aren’t available, talk honestly about when they might be — or if they never will be. Otherwise, you risk breaking trust.
• Offer something else. “If a salary increase is not within the budget, companies should consider other avenues to incentivize employees,” says Rosencrans. “This can include more PTO, an adjusted work schedule where the employee is able to be more flexible, or other perks that have minimal impact on the company’s bottom line.”
• Show a clear path. Help employees understand how the new or expanding role fits into their own long-term career plan. Ideally, it helps them get ahead in their career and make a much bigger bump in pay when it’s feasible to give raises.
• Offer more of what they want. Ask employees what would make the new role a more ideal working situation for them. Some may want more flexibility. Others are interested in increased autonomy. Some might prefer to be relieved of other duties. If you can build the role that creates an ideal work/life balance, it’s more valuable than a raise.
• Double down on sincere praise. Promotions mean people are doing great things. They’re worthy of more. Spend ample time talking about the good work employees have done and how it positively impacted other people, the organization, clients and/or your community.