Promoting employees without increasing pay

PROMOTING EMPLOYEES WITHOUT INCREASING PAY

Ahmad U3072227Ario Ardianto Baroto U3088020Naina Dhingra U3080090Tsering Choden U3105935Ugyen Dorji U3103499

Presentation Outline Case introduction

Theories related to the case

Application of the theories to the case

Recommended solutions

Conclusion

Promoting without giving raises

• Promote from hourly job position to supervisory or management level

• Employment status, classification change and pay?

Reasons:• Boost morale and retain key employees • Cutting costs in difficult economic times

Problems:• Causing resentment and confusion• Morale problems and retention issues

Theories related to the casePromotion usually include pay increases

There is a strong support in the literature which indicates that promotions are positively correlated with wage increases (Gibbons & Waldman, 1999)

Distributive Justice theory claims, employees perceive that rewards are distributed in relation to contributions.

Theories related to the case Equity Theory: Employees evaluate and compare their inputs/outcomes ratio to others inside the same organisation or in another organisation to determine fairness.

• If employees perceive themselves as either undercompensated or overcompensated, this will create tension and will drive them to respond to this situation to reduce the tension and restore equity (Adams, 1963).

Application of the theoriesCompanies that promote employees without pay are

more likely to lose their top performers (76%).

Around 40% of HR senior executives recognize that salary and bonuses are the main reason employees leave their company (www.workplaceinfo.com.au, 2012).

Increased responsibilities are precious opportunity for employees to learn more, develop and grow.

Some managers respond well to the employees who are willing to take more responsibility for no extra pay and might be recorded as part of an individual’s career

path development.

Application of the theoriesSometimes some companies exploit those staffs

who agree to take on more work which might be more working hours or more responsibilities.

Consider distributive justice principle Rewards must be distributed related to contribution

Manage equity & fairness perceptionHigher responsibility should be fairly compensatedMay not always be monetary incentivesBe consistent, avoid discriminatory reasons

Recommended solutionsTransparency in terms of communication

Downfall in overall industry

Specific issues: losing a contract, unpaid bills

Recognize the value of employees

e.g : Revise mission statement to include all employees

Put a time frame on the freeze and

revisit the issue in the future

Recommended solutionsGood Values and strong Ethics of the company

Equal treatment, Top management concerned for employees and healthy working environment

Other form of benefits :

Increased vacation time

More flexible time schedule

Training for professional development

Working from home once a week

ConclusionOrganisations that are promoting their employees

without increasing pay are faced with potential problems, such as morale and retention issues.

Increased responsibilities are precious opportunity for employees to learn more, develop and grow, and might be considered in their career path development in the future.

Organisations must follow distributive justice principle, manage perception of equity and fairness, and recognize

the importance of participation and

communication.

ConclusionClear and transparent communication from management to

the employees is very essential in order to have positive

outcome. Informal meetings and involvement of influential

people from the employee group will be very helful.

Our recommendations :

Communicate clearly, put a time frame to reevaluate the

freeze,

recognize employees’ values, good values and strong

company ethics, and provide other forms of compensation for

the

promotion.

Discussion questionsWould you accept a promotion

without a pay increase? Why? What are the risks of promoting

employees without increasing their pay?

What can organisations do to overcome those risks?

Thank you for listenin

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