Why promotion doesn't always mean pay rise


A new study has found 89 percent of New Zealand chief financial officers (CFOs) and finance directors say a promotion is no guarantee of a pay rise.

The research, commissioned by recruitment consultancy Robert Half, surveyed 100 CFOs and finance directors across the country about trends in the workplace.

Many employers (41 percent) feel employee performance in the new position must be assessed before they'd consider giving a pay rise.

A lack of financial resources is the second biggest reason (23 percent) why employees don't received a pay rise. This is followed by employers saying the job had to be filled urgently and there was therefore no time to consider remuneration (12 percent).

Director of Robert Half New Zealand, Andrew Morris, says no immediate increase in salary can have mixed outcomes in the long term.

"If an employee is promoted, it's a clear sign that their company has confidence in them and the work they are doing. But if they are expected to take on more responsibility and more complex tasks without receiving an increase in salary, this can have a negative impact on their motivation."

He says an employee may be quicker to consider leaving an organisation if there is no financial incentive.

"A pay rise can be a highly effective staff retention tool especially when employees are asked to take on additional responsibilities, and if they don't receive a pay rise at that time then it is important to explain to them why not."

Mr Morris says for companies whose CFOs are not included in the 11 percent of organisations who always offer a pay rise with a new position, it is important to set a review date with the employee.

"Employers need to offer clear guidelines on when their salary will be reviewed together with firm benchmarks that need to be attained in order for the employee to enjoy a salary uptick."

Mr Morris says employees could ask for flexible working arrangements and loyalty leave instead of a pay rise, however he warns sometimes it is the right move to accept a new job without the extra cash.

"It is also important for employees to remember that the challenge of a more responsible role can deliver long-term career benefits which can compensate for the lack of an immediate pay rise."

 At 15 percent, large companies are more likely to always give a pay rise when promoting an employee, while small-to-medium sized businesses are more likely to give a status upgrade only.


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