Commentary: A new title without the pay raise – the pros and cons of a ‘dry promotion’

SINGAPORE: The end of the year is nigh. To say 2023 was a tough year would be understating things.

Economic uncertainties abound, with the Israel-Hamas and Russia-Ukraine wars still raging and gross domestic product growth rates in major economies such as the United States and eurozone projected to slow further.

In Singapore, retrenchments are on the rise and labour demand is cooling. With median real income down in the first half of the year and the cost of living expected to rise next year, there are concerns on what 2024 might bring.

The National Wages Council has recommended that employers consider giving employees a one-off payment as well as a pay bump for lower-wage workers.

Will this be enough to help ease financial pressures and retain workers?

According to Robert Walters Singapore’s annual salary survey, 79 per cent of employees are looking for a new role in the next 12 months. The top reasons that would make them stay on are an increased salary (94 per cent), an opportunity for promotion (50 per cent), and a retention bonus (46 per cent).

As pay review season approaches, the concept of “dry promotions” - promotions without accompanying pay raises - has become a talking point.

A report by the Society for Human Resource Management earlier this month cited US employment website Salary.com as saying that 37 per cent of US employers gave their staff a “dry promotion” in the past year.

Although there are no firm statistics on how prevalent such promotions are in Singapore, a 2016 survey by recruitment agency Robert Half found that only 17 per cent of Singapore companies always give a pay raise with a promotion.

SHOULD YOU ACCEPT A DRY PROMOTION?

Receiving a promotion is a clear sign of confidence in an employee that is normally packaged with a simultaneous boost in salary and benefits. As such, the prospect of additional work without its attendant pay-raise can make one uncomfortable. As it is, 62 per cent of Singaporean workers in a survey by HR solutions company Employment Hero last year reported experiencing burnout.

But while a salary increase is a tangible acknowledgment of one's contributions, a promotion without a bump in pay may still carry substantial weight in terms of professional growth and career trajectory.

Employers might use dry promotions strategically to retain and motivate high-performing individuals, signalling that their efforts are valued and that the organisation envisions a more significant role for them.

Moreover, the absence of an immediate financial reward doesn't preclude the possibility of future monetary gains.

If the role that is being offered is something that you have always wanted because it is an exciting opportunity for learning and exposure that would help your career, then regardless of whether there is extra remuneration, it might be a good idea to grab it.

Moving up the corporate hierarchy often entails taking on more responsibilities, managing larger teams, or overseeing complex projects. There is no better way to prove to your leaders that you are capable of greater responsibility than to take it on and shine. The rewards will come later when your results speak for themselves.  

However, if the position is one you know you will not enjoy, or worse still, is a hot seat that everyone else shuns, then you should exercise extreme caution.

WHEN TO SAY YES, WHEN TO SAY NO

Before accepting a promotion without a salary increase, reflect on whether this is the first time such an offer has been presented to you. This is important because it reveals the intention of your employer.

If you have previously accepted a dry promotion and now, yet another is being foisted upon you, you really need to ask yourself if you are being taken advantage of. 

The other consideration is whether you have the spare capacity to undertake this bigger role.

A marketing manager I know was once tasked to manage an extra five product lines across three countries but was not given any additional manpower or resources to oversee this expanded role. Ultimately, he succeeded in achieving his targets but ended up with a bad case of burnout.

The dry promotion could also backfire if it is given in addition to your current duties, and the deluge of additional work makes you fail at both your roles.

THINK BEYOND CASH

Before accepting a dry promotion, it is necessary to set the boundaries of the assignment.

Even though there may not be an immediate increase in salary, have a discussion with your boss and set a timeline or milestone where the issue of salary negotiation will come into effect.

Another tactic could be to ask for more resources so you can accomplish your goals quicker or more efficiently. It could be in the form of additional manpower, access to new technology and services, or even new equipment that could make the job easier.

Usually, the reason given for dry promotions is that there simply isn’t enough money in the budget for this newly expanded role.

In the 2016 Robert Half survey of 100 chief financial officers and finance directors in Singapore, about 43 per cent of the respondents said that the main reason for promoting employees without attributing a corresponding salary increase was because they wanted “to assess an employee’s performance first before remuneration is increased”.

Other reasons included the lack of “financial resources to increase salaries” (22 per cent), the promotion was given because “the role had to be filled urgently” (11 per cent), and the remuneration was already too high for the employee’s previous position (7 per cent).

Employees could consider if there are other ways to sweeten the deal. For instance, a client of ours asked for an increase in transport allowance and leave days. Another managed to get a full sponsorship for a professional training course as part of her dry promotion. 

As Gandhi once said, “If you don’t ask, you don’t get it”.

Adrian Choo is the CEO and founder of Career Agility International, a career strategy consultancy.