Time was, giving employees a fancy new title — without any more money — worked as a morale builder. Nowadays? Not so much.
According to John Skousen, an employment attorney with Fisher & Phillips, the practice can “become confusing, disorganizing and difficult when striving to maintain job classification and proper salaries … including dealing with inaccurate job descriptions with misleading duties requirements.”
5 questions about no-pay promotions
If your company is thinking about going the promotion-without-pay route, Skousen suggests asking the following questions to determine when and how to offer the benefit:
1. Is the individual a top-performer? If the employee would be difficult and costly to replace, raising the title may help keep him or her engaged for the short-term — and it’s definitely less costly than replacing the worker. However, management should promise a compensation review no later than six months after the title change.
2. Can you offer other benefits besides a salary increase? Instead of a promotion, would perks like increased vacation time, professional training or more flexible scheduling options be just as effective?
3. What’s the difference in pay between the current and the new position? If the market salary of the employee’s current position is comparable to the new one, then a title-only promotion can benefit the person.
4. Is the promotion real? When companies hand out titles that don’t accurately reflect what the employees are actually doing, they’re just asking for trouble. Title “dilution” can lead to resentment and ridicule from other workers — especially those with titles that do match their responsibilities.
5. Do you understand all of the legal risks? When employers give staffers inflated titles for job duties they aren’t really qualified to perform, who’s going to be responsible for those workers’ actions — including, quite possibly, their eventual failure? Plus, adding a supervisory title without a change in the worker’s actual duties could lead to classification issues.
