According to an OfficeTeam survey of 433 office workers, 55 percent polled said that they would be willing to accept a promotion that doesn't include a raise.
Rosie Hernandez found herself standing in her manager’s office in disbelief. He was offering her supervision of a larger team and a title that reflected her new role. What he wasn’t giving her was a raise. “That will come when we all reach our goals,” he told her.
Hernandez hesitated before answering. She was a mother of two young children and a marketing representative at a Miami medical sales firm. The added responsibility would require more hours devoted to work and wreak havoc with her work/life balance. Turning down the offer, though, might be viewed as a lack of career ambition.
Such dilemmas are becoming more commonplace at workplaces as employers continue to cautiously guard their salary budgets. New research from CareerBuilder found that nearly two-thirds of employers said that a promotion at their firms doesn’t always entail a pay raise. And, according to an OfficeTeam survey of 433 office workers, 55 percent polled said that they would be willing to accept a promotion that doesn’t include a raise.
Experts weigh in
Career coaches say when faced with this sort of situation, it is important to consider your experience, your career goals and the internal politics of your organization.
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“If the promotion helps to develop your career and you might need a little bit of development, that would be a reason to take it without a pay raise,” says Daniel Heimlich, president of The Heimlich Group, a Washington, D.C., marketing advisory and consulting firm.
Even without the commensurate compensation, a better title could put you in a stronger negotiating position and lead to a higher salary at future employers. “Once people think of you in that way, you become that, and money will come along with it eventually,” he says.
But before you sign on for an unfunded promotion, you want to make sure you’re not agreeing to simply do more of what you’re already doing. The promotion should come with greater scope and responsibility and more decision-making authority. Heimlich warned: “You don’t want to be continuously strung along with new job titles.”
Bring it up
It’s imperative to at least discuss a pay raise, says Erin Knight, a banker who has experienced the promotion-without-a-raise scenario: “Set up a time frame and an outcome to consider for a pay increase. It should not be an open-ended time frame.”
Knight, Miami market president at Stonegate Bank, suggests you back up the agreement in writing. “Managers change, people move on, and you will be forgotten.”
In her case, she had a long history with her boss and trusted he would bump her pay after she proved herself. He did come through.
Before accepting a new role, workers may consider requesting a compensation review in six months or discussing other perks, such as more flexibility in exchange for the longer hours; more vacation benefits; a higher stipend for expenses; or even management training.
“If someone is a key employee, I’ve seen clients who entice them with a small percentage of stock,” says Dorothy Eisenberg, a partner in Miami Beach accounting firm Gerson, Preston, Robinson & Co. “If you’re going to continue to help in the growth of the company, you should be rewarded for that.”
Without some type of incentive, Eisenberg advises against accepting more responsibility. “It might be fine for the short term, but I would not do it for a long-term period of time.”
Of course, to make a cashless promotion more palatable, it helps to understand the reasoning behind it. A common reason is, “We can’t afford to pay you more right now.”
Ana Maria Fernandez Haar used that approach when she wanted to motivate her key people at her former advertising agency as it expanded.
“Sometimes, I didn’t have enough resources to compensate for the job I was about to ask them to undertake. I would give them the title with an understanding that as soon as possible, monetary recognition would come about — and it did,” she says.
Another reason employers give is that they are doling out a stretch assignment, a chance to prove you are worthy of the bigger job and higher salary. “I know a lot of women who have taken the risk to prove that they could do it,” says Margaret Nee, vice president of development at Miami-based Pointe Group Advisors, a commercial real estate company, and president of CREW-Miami, a real estate industry organization. “If they hadn’t, they might never have gotten that experience.”
Human-resources consultant Mark Hatcher advises employees to be sure they understand their industry, the salary structure and the political environment within the company. Doing your research will help you to know whether you deserve more for the expanded role and whether there are other opportunities outside your company, he says. But you will want to consider who else would take the promotion you might turn down, he says. “At larger firms it can be political and more about who is trying to get ahead and be noticed.”
Hatcher, CEO at EnginuityHR, a Dallas human resources outsourcing firm, has seen both outcomes. “It has either worked out extremely well or become a complete nightmare when what was promised didn’t come through.”
It’s a risk for employers, too. “If you’re going to promote, you don’t want to de-motivate or have them jump to a competitor.”
While it’s not illegal to promote employees without offering raises, there are several key issues for employers to consider. They should first review recent promotions made in their company of similarly situated employees and pay attention to the demographics to avoid the appearance of discrimination. Employers also need to be aware that promoting an hourly employee into a “management” position and converting pay structure from hourly to salary does not necessarily relieve the company of its obligations under the Fair Labor Standards Act.
“We tell our clients that promotions should matter and without an increase in pay you could create future problems,” says Paul Ranis, a labor and employment attorney with Greenberg Traurig in Fort Lauderdale, Fla.
As an employee, if you honestly do not want to take on a bigger role or feel you are being taken advantage of, it is OK to turn down the promotion, career coaches say. Often, people who take a promotion discover that they hate the longer work hours, added travel or commute, or the way new demands affect their personal lives — and they resent the sacrifice without compensation.
Hernandez, the medical marketing representative, says she told her boss she already was in a role where she felt she was flourishing. “I said, ‘I’m ambitious, but that’s just not the right role for me at this time.’”