Promotions without pay increases may raise compliance questions

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Promotions that are instituted without any pay raise might raise compliance questions, even if they were made with the intent of boosting morale.
Even without a pay raise, a promotion might result in a new title and enhance a worker’s status in the workplace. But George Lopez, an attorney with Tripp Scott in Ft. Lauderdale, Fla., cautioned that employers need to ensure that there isn’t a discriminatory pattern with promotions without raises. “Employees may look at co-workers and say ‘when you gave a promotion to white managers, you gave raises,’ ” he remarked.

Any time raise-less promotions are made, the employer is establishing precedent, Lopez said. It is important when employers make a compensation decision of this kind that they are consistent with their message, he added. The rationale for promotions without raises might be that the company is cash strapped, the employer has lost major accounts or the industry is in a major slowdown, for example.

The employer should note whether the flat compensation is a temporary measure, such as when there is a one-year moratorium on raises. Another consideration for employers that should be planned for is whether there will be retroactive reimbursement of the raises that ordinarily would have accompanied the promotion.

Be clear about why the promotion does not include a raise and for how long it will be without a raise, he recommended. Be cognizant of the demographics of the people who are receiving promotions without raises, he said, noting that employees who receive raise-less promotions might argue that they have been discriminated against based on a prohibited factor such as sex, creed, race, color, national origin, age or disability.

To defend themselves from such claims, employers should be very fact-specific about the reason a promotion does not include a raise.

What line managers must master to be successful

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We know senior leaders must demonstrate respect, trust and caring for the workforce they manage, but what about line managers? Studies have repeatedly proven that people stay with people not entirely companies.

So as you hire new supervisors, if nothing else teach them the following:

RESPECT

Line managers must be careful to remember that respect is a two-way street. If they want the respect of their direct reports, then managers must show respect for their direct reports as well. “Respect is not something you only give away when it may serve your needs.” The same is true of employee recognition. You don’t show your appreciation for your employee efforts only when those efforts directly work to your advantage. You should also be liberal with your thanks when your direct reports may have performed well in helping another manager, team or department.

TRUST

Trust is often more easily gained by direct managers than senior leaders who are more removed from employees. But as with respect, trust is a two-way street. You have to earn it by the way you behave toward them and those around them. Your people need to believe that you are competent and that you care.

CARE

One way to demonstrate to employees you care about them is by taking the time to talk with them, to clearly communicate what you need them to do, praise them when they’re doing it well, and offer constructive feedback when they need improvement. Harvard Business School research showed employees overwhelmingly prefer a manager who is likeable to a person is very skilled but terrible at communicating.