Promotions Matter, Part 2

I thought I had finished with this topic in my last article, when I got a great note from one of our readers reminding me, ". . . to get managers to plan ahead for the financial part [of promotions] -- that remains a challenge." Of course, there is so much to cover on the topic of promotions, but Karen pointed out one important area we often overlook. Managers/supervisors are often promoted from front-line positions without much training in compensation practices. They typically learn about budgeting, coaching and awarding promotions on their own through trial and error.

Is Compensation making its best effort to support managers who want to give promotions? The last article on promotions encouraged us to mentor managers through the decision process. But what if the challenge starts earlier, in the basic understanding of how to use a salary budget? First-time managers face this scenario, and Compensation should be better at clarifying things right from the start. 

Let's look first at the pros and cons of the administration process that your company uses for promotions, so we can notice our  challenges.

• Some companies include promotional funds in the annual increase budget and allow managers to allocate promotions and increases from it with no specific guidelines. While this approach gives managers broad control, it can be a real challenge to those who haven't had to juggle dollars vs. employee expectations quite so candidly. In this scenario, it would be best to target first year managers/supervisors for coaching through the process. The foundational understanding that you give them will pay off in future years.
• Other companies communicate separate amounts for salary increases and promotions. This approach can be administered in various ways. Approval from Compensation on budget use is the most straightforward way, but it limits manager control. In these cases, managers will need coaching on how to manage employee expectations upfront, and possible disappointment further into the salary cycle. Alternately, some companies require no approval, giving the manager latitude to use the budgets at will. But what about the newbie manager who just doesn't have refined judgment yet--let's say s/he's not awarding promotions just to hold on to the money--how do you catch it? Another case for coaching first year managers/supervisors.
• Finally, there are some companies that do not specify anything but the company's annual increase budget percentage. This can be seen as giving managers a chance to make a business case for their department's chunk of the budget based on business performance/role in financial results. The con to this approach can often be that managers are so hard-driving that they promise promotions before their budget is approved, leading to serious misunderstandings. Here's where traditional communications can be the most help, to catch this problem early in the process. Let's take a look.

If the bottom-line is that promotions are tricky, and many managers need guidance (or refreshers) on the considerations that go into a promotion, coaching is the best technique for building insight most, but not all, of the time. Other communications--available on the intranet as needed--can cover the administrative tactics and lay out the decision making process.

• Tip sheets--Provide the latest information, highlight recommendations and how to's on a single page.
• FAQs--Cover the list of the most common, and also toughest, questions that you get on promotions.
• Worksheets--Walk managers through the decision making process, identifying forms and approvals needed at each step.
• Video--If you have the budget, engage managers in a short visualized story highlighting the decisions involved.

Margaret O'Hanlon brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. A former Board member for the Bay Area Compensation Association (BACA), Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at everythingiscommunication.com.