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Promotional GuidelinesKey Findings from the WorldatWork Survey of Promotional Guidelines, 2010
© 2011 WorldatWork. All rights reserved.
Overview
Examine how the current environment impacts employee satisfaction
Discuss the importance of promotional activity within total rewards programs
Discuss current promotional practices survey results
Review implications
Current Environment
Let’s consider current environment within which we are operating
And a question …
Where does promotional activity fit within your total rewards program?
Employee Satisfaction Drivers
Cash
Benefits
Boss Relationship
Work-Life Balance
Promotions / Career Development
Recognition
EmployeeSatisfaction
Job Losses Declining, But Is Real Growth on the Horizon?
Source: Bureau of Labor Statistics – years 2009 – 2010 (data in 000’s)
Avg. monthly increase: +49k
Avg. monthly increase: +138k
Jobs* Lost / Created Monthly Change
* Total non-farm seasonably adjusted
Salary Budgets are Recovering, But Still Historically Low
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
?
sal
ary
bu
dg
et %
Lowest figure since survey’s
inception
Source: WorldatWork Salary Budget Survey 2010-2011 (exempt salaried budget)
How Do Organizations Generate Promotional Opportunities?
Organizational Growth
Vacancies as employees leave for other companies
Retirements
Total Rewards Scorecard
Cash Compensation
Benefits
Boss / Subordinate Relationship
Total Rewards Scorecard …cont’d
Work-Life Balance
Promotional Opportunities /Career Development
Recognition
Job Satisfaction Is Declining
40
45
50
55
60
65
'87 '95 '00 '05 '06 '07 '08 '09
% S
atis
fied
45.3
Source: Conference Board
61.1
Intangible Rewards Remain Important
% Greater Focus in Future% Current Focus
Education and training programs
Career / development opportunities
Flexible workarrangements
Nonfinancial recognition
Work climate / culture
Work-life balance
54%
48%
48%
40%
57%
48% 44%
53%
52%
40%
60%
50%
48%
57%
40%
48%
48%
54%
80% 60% 40% 20% 0% 20% 40% 60% 80%
Source: The Hay Group and WorldatWork – Next Reward Practices Survey 2009
Methodology
Survey was sent out to 4,947 WorldatWork members during September 2010
Response rate of about 19%
Demographics of respondents similar to WorldatWork membership as a whole
Definition of “Promotion”
Please select all criteria that are REQUIRED to be considered a promotion. (n= 719)
Increase in Pay Grade,
Band or Level
Addition of Higher Level
Responsibilities
New Title New Department
Other
Definition of “Promotion”
Please select all criteria that are REQUIRED to be considered a promotion. (n= 719)
Increase in Pay Grade,
Band or Level
Addition of Higher Level
Responsibilities
New Title New Department
Other
32% require both
Size of Promotional Increases
“In 2010 (or current fiscal year), what has been the average promotional increase, expressed as a percentage,
for each employee class in your organization?”
Employee Type Average Minimum Maximum Mode1
Nonexempt (hourly) (n=504) 7.1% 0% 45% 5%
Exempt (salaried) (n=584) 8.3% 0% 23% 10%
Officers / Executives (n=380) 9.5% 0% 30% 10%
1 The mode is the number that occurs most frequently in the dataset.
Size of Promotional Increases by Level of Turnover
Organization Turnover Rate
0% - 5% 6% - 10% 11% - 15% 16+%
Nonexempt (hourly) 6.8%
(n=129)7.0%
(n=184)6.2%(n=73)
9.0%1
(n=55)
Exempt (salaried)8.1%
(n=156)8.2%
(n=211)8.1%(n=81)
9.5%(n=58)
Officers / Executives9.5%(n=97)
9.3%(n=136)
9.1%(n=56)
9.8%(n=46)
1 Organizations that reported a turnover rate of 16% or higher additionally report a statistically higher average for nonexempt promotional increase rates.
Determination of Promotional Increases
Pay range for the new position
Rates paid to other employees similarly situated within the organization
External pay data, if available
Qualifications of the individual, compared to the qualifications of other employees in the same job within the organization
Performance level of the individual being promoted
A fixed percentage increase for most promotional increases
Number of pay grades between the old position and the new position
Whether the promotion involves a change from nonexempt to exempt classification
66%
60%
36%
30%
29%
21%
19%
8%
Option
Number of Promotions Down
3 A paired sample t-test demonstrated a statistically significant difference between annual promotions given in 2009 and 2010 (p<.000).
4 A value of 98 was submitted and considered excessive. This value was excluded from the analysis.
“What percentage of employees were promoted in 2009 (or last fiscal year)? Please specify as a percentage of the number of total employees.” (n= 477)
“What percentage of employees does your organization usually promote on an annual basis? Please specify as a percentage of the number of total employees.” (n= 441)
Employee Type Average Minimum Maximum Mode2009 or last fiscal year promotions 7.0% 0% 40% 5%
Typical annual promotions 8.1%1 0% 35%2 10%
Funding of Promotional Increases
“How does your organization fund promotional increases? (Check all that apply.)” (n= 600)
We budget for promotional increases separate from other pay increase budgets.
We budget for promotional increases as part of our merit budget.
We pay for promotional increases with vacancy savings (savings from vacant positions or during recruitment).
We pay for promotional increases with salary savings (hiring at a lower rate than previous incumbent). We budget for promotional increases as part of another budget. Please specify budget.
We pay for promotional increases out of merit budget, but merit budget is not inflated to cover promotional increases.
We pay for promotional increases out of another budget, but the other budget is not inflated to cover promotional increases.
44%
24%
22%
16%
13%
13%
8%
Option
Coordinating Promotions with Merit Increases
“How are merit increases managed for promoted employees?” (n= 620)
Promoted employees are eligible for nearest merit increase.
Merit increase is included in promotional increase.
Promoted employees are eligible for a prorated merit increase.
Promoted employees are ineligible for a merit increase until next cycle.
Other
46%
17%
16%
7%
15%
Option
Coordinating Promotions with Bonuses
“How are bonus or incentive payouts calculated for employees who have received a promotional increase?” (n= 579)
Prorate of previous and new rates
New rate of pay and new bonus rate, if applicable
Previous rate of pay and previous bonus rate
Current rate of pay and previous bonus rate
Previous rate of pay and new bonus rate
43%
29%
4%
3%
1%
Option
Other 19%
Frequency of Promotions
“How often are employees eligible for a promotion?” (n = 613)
Timing of Promotions
“When do most promotions in your organization occur?” (n= 622)
Promotions Have Positive Effect on Motivation and Engagement
Extremely negative /negative effect
No effect or neutralExtremely positive /positive effect
6%
6%
33%
36%
62%
59%
Communicating Promotional Policies
“What is your organization’s approach to the communication of promotional guidelines or policy?” (n= 622)
Other
We communicate the guidelines to employees only when they are
involved in a promotion.
We want every employee to fully understand the guidelines and policy.
The guidelines and policy are mostly to guide HR and management; we will share with employees when they ask.
Promotion as an Attraction Tool
“Does your organization feature or market the promotional opportunities (or activities) as a key employee benefit when
attempting to attract new employees?” (n= 614)
Yes34%
No66%
Organizations Should Consider Lateral Increases
“Are employees typically eligible for a promotional increase when moving laterally?” (n= 622)
Yes8%
No57%
It depends onthe position
35%
Summary
There are several forces in the workplace impacting employee satisfaction
Organizations should consider their ability to provide promotional / career development opportunities to their employees relative to other total reward elements
Communication of promotional programs is “low hanging fruit” to increase engagement
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