When it comes to the concerns and goals of your employees, you can bet that employee promotion is at the top of everyone’s list. The chance for a promotion is often what motivates a team more than any other factor, and managing promotions effectively is one of the most important ways you can drive your business’s success.
Have a team that’s made up of hourly employees or shift workers? Your approach to hourly employee promotions may be a bit different, but it’s no less important than with a salaried workforce. In fact, studies have shown that hourly workers are twice as interested in being promoted internally than they are in switching jobs to climb the career ladder.
Promotions can feel highly personal, so a well-thought employee promotions strategy is key. You’ll need to carefully consider how to choose your candidates, and decide the best way to communicate a promotion to your other staff—not to mention tackle the added documentation.
From beginning to end, here’s our in-depth guide to employee promotions for your hourly workers.
What is employee promotion?
Employee promotion is the process of hiring an employee for a more senior role at work. Along with an increase in status and responsibility, a promotion often brings an increase in salary, benefits, and decision-making power.
The difference between an internal promotion and an external promotion
An internal promotion—also called an internal hire or “hiring from within”—is when a company chooses to promote or transfer an existing employee into a new role. An external hire is when a company recruits an outside employee, bringing them into the company to fill an open role.
These two types of hiring methods each have their pros and cons. External hiring can involve a higher hiring cost, longer onboarding periods, and more uncertainty about the candidate’s ultimate success in the role, but it can also help bring fresh ideas and a bigger talent pool into your company.
Internal promotions can create a negative competitive atmosphere, though this can be turned into healthy competition with a fair, transparent process that’s free from bias—adding to a sense of excitement and boosting performance. And although an internal promotion means that the candidate’s previous role will become vacant, it should be easier to fill, since their old position will require fewer credentials.
If you have a team of hourly or shift workers, bear in mind that more often than not, hourly workers want to be promoted from within. Internal promotions are an investment in your team members who have already put their time and energy into your business. Internal hiring can be good for morale, productivity, job efficacy, lowered hiring costs, and much more.
The 3 types of employee promotion
While an employee promotion often means “higher position, higher salary,” this actually applies to just one of three possible approaches to employee recognition. The different types of employee promotions are:
1. Vertical promotion
Vertical promotion is an upward movement of an employee within your company. It involves a change in skills and experience along with a change in salary, responsibility, status, and benefits. A rank-and-file employee becoming a manager would be a classic example of a vertical promotion. This is the most traditional way to promote employees, and what most people think of when they think about promotions.
2. Horizontal promotion
Horizontal promotion is when an employee is rewarded with a pay increase, but with minimal or no change in their level of responsibility. An example would be when an employee moves to a new position at the same level within your organization. Another kind of horizontal promotion would be when you recognize an employee as a “subject-matter expert,” increasing their salary to reflect their expertise, but keeping their duties more or less the same.
3. Dry promotion
A dry promotion is when an employee gets a new title and an increase in their responsibilities, but with no pay raise or increase in their benefits. The idea is to test that employee’s leadership abilities before offering them an actual promotion, helping them develop their skills before an official move upward. Unsurprisingly, it’s the kind of employee recognition with the worst reputation—and one you should avoid wherever possible.
Open vs. closed promotion
These three promotion types fall into two categories: open employee promotions, and closed employee promotions.
- An open promotion is when every individual in your organization is eligible to apply for a position. If you want a large pool of potential applicants and the needed skills are transferable, you may want to choose an open promotion process.
- A closed promotion is when only certain team members are eligible to apply. If you have highly specific requirements, a closed promotion helps you narrow your search and save you time in finding the right candidate.
The benefits of employee promotions
Finding the right workers for your team is easily one of the biggest challenges for a small business owner. Finding great people for every role can feel like a never-ending headache, but by developing the talent within your team, your struggles go down significantly.
Here are 9 benefits of internal employee promotions that might make you reconsider an external search.
When you hire from within, you:
1. Show that you value hard work and reward it
It just makes sense—employees are happier and more engaged at work when they feel valued. Studies show that 82% of employees are happier when they’re recognized at work. The chance at a promotion helps them care more about their work, and getting one validates their efforts.
The effect of internal promotions has a significant effect on employee engagement and morale—and not just for the promoted employee. When they see their peers advance, it can help the rest of the team feel like there’s room for them to rise as well. When done right, every promotion can feel like a shared win.
2. Offer career growth
It’s human nature to want to grow. Without ongoing career growth, we end up feeling stagnant and unmotivated in our jobs. The members of your team are no exception—they want a sense of a big-picture vision, and to feel like they’re working towards achieving it.
There’s a reason that a lack of opportunities for advancement is one of the top reasons people quit their jobs. When an employee feels they can’t grow where they are, they start to look elsewhere for career growth opportunities. Opportunities for growth mean a lot to your employees, and they can have a profound impact on your company, too.
3. Increase employee retention
If you’re trying to create higher retention levels at your company, internally promoting your best employees is a great place to start. By recognizing their talent and challenging them, they’re more likely to be loyal to your company and less likely to want to leave. 63% of surveyed team members say they’re less likely to look for another job if they’re regularly recognized. Especially for a small business that’s evolving and growing, this is incredibly important to avoid losing your top workers to competitors.
4. Reduce hiring costs
Want to spend less money on talent acquisition? Internal employee promotion costs less than hiring from the outside. Employers these days spend an enormous amount on hiring—an average of $4,129 per job according to the Society for Human Resource Management, and many times that amount for managerial roles or if you’re using a recruiter. Developing the talent within your team lets you save on these costs and channel your resources to other parts of your business.
5. Shorten onboarding
Acclimating someone entirely new to your team usually means a longer onboarding process. But when a person is already established at your company, their adjusting process tends to be much shorter. By coming into a new role from another department or position, they bring their existing knowledge of your company—a real-life, firsthand experience that can’t be gained quickly, and that will be lost if they leave.
6. Boost productivity and motivation among employees
If an employee knows for a fact that they’re seen to be doing their job well, they’re more likely to push themselves to work even harder than before—pushing their performance and their productivity to an even higher level.
Rewarding your team for their hard work not only makes them more contented, but more productive, too. It’s been found that happy employees are up to 20% more productive than unhappy ones, and among a team of salespeople, happiness has an even greater impact: raising sales by 37%.
It comes down to this. When a person feels that they matter, that they’re engaged in relevant work, and that they’re moving themself and their team forward, it deepens their commitment to doing good work. And that commitment contributes to the success of your entire company.
7. Create healthy competition
When done right, a little healthy competition can also be something that positively motivates your employees. If an atmosphere of competition singles out and highlights low performers, causing people to feel anxious, then workers are more likely to want to sabotage each other or cut corners. But if you can boost excitement by emphasizing the potential positive consequences of competition—the rewards and recognition that come to top performers—then team members are more likely to come up with creative solutions.
This is how a competitive spirit becomes something everyone can benefit from. As with so many things, it hinges on how you communicate as a leader with your team: how you position competition, and how you model it.
8. Foster leadership qualities
The promotion process is something that starts early in your relationship with a given employee. The most effective business owners and managers are always on the lookout for potential leaders, and constantly taking steps to develop employee leadership potential. When you eventually promote an employee, it draws current leaders’ attention to that individual, helping them see the leadership potential within that person and help to develop it, too.
9. Raise chances for success in the role
Did you know that it can take some external hires several years to reach the same productivity levels as internal hires with the same job? A rocky or long employee transition can have a trickle-down effect, affecting other teams and even losing you existing or prospective customers or clients. And if that employee turns out to be a poor fit and the role needs filling a second time, you’ll be back to square one.
Another pitfall of too much outside hiring? It can cause your current employees to spend more of their time and energy monitoring and applying for jobs elsewhere, draining their focus from their current role.
3 things to consider for hourly employee promotions
If internal promotions aren’t managed well—especially among a team of hourly or shift workers—then one person’s success can stir up feelings of resentment in other team members, while the aspirations of deserving people can go unrealized.
That’s why it’s so important to have a clear strategy when making your employee promotion decisions. Three tried-and-true ways of determining good candidates are:
1. Peer feedback
Peer feedback is a great way to gauge someone’s suitability for a role. This is especially true if a candidate is moving into a management position. Because coworkers have a unique opportunity to observe an employee’s performance, they can offer extremely useful insights into that person’s skills and leadership potential.
2. Performance reviews
Traditional performance reviews, carried out by managers, are another great approach when assessing employees for promotion. Just remember that a successful performance review isn’t one-sided, but a conversation—a chance to see things from your employee’s perspective.
3. Company culture
Does the person you have in mind fit into your organization’s culture, and will they want to promote it if chosen for the role? A “fit with our culture” is the number one hiring consideration that employers report using, and it should be at the top of your list.
Signs that your hourly employee should get a promotion
Along with deciding on a firm process for evaluating candidates, you’ll want to have a clear idea of when an individual employee might be ready for promotion.
Here are the most important qualities you should look for in a candidate:
1. Demonstrates high performance
An employee’s track record in their current role is one of the biggest signs that they’re ready for more responsibility. Is the person consistently doing quality work? Can they rise to a challenge, and are they efficient and punctual? It could be time to consider a promotion.
2. Shows initiative and takes ownership
If a task needs doing or a solution needs figuring out, does your employee step in without being asked? Do they take initiative, find out who to tell or consult about it, and work through setbacks to see their initiative through? A person who’s creative, a problem-solver and a strong decision-maker will probably do a great job in a more senior role.
3. Can roll with changing priorities and new projects
Is your employee a person who shows flexibility in the face of changing plans and last-minute projects? If they were to take on more responsibility, would they keep the bigger picture in mind, for their team and for your company as a whole? Someone who can juggle, reprioritize, and show big-picture thinking is someone you should be recognizing.
4. Receives feedback well, and grows from it
A growth mindset is an invaluable quality in any employee, but especially in your more senior employees. If someone is constantly learning, adapting, and reflecting on their successes and failures, then they’ll quickly develop the skills required by a new role—and be more likely to stay motivated.
5. Collaborates effectively with other team members
No team can run effectively—and no business can succeed—without good collaborators at the helm. Someone who gets along well with others, who has a helper mentality, and who values teamwork (a quick giveaway: do they use “our” more often than “mine”?) is an ideal candidate for an internal promotion.
The steps you need to take to promote an employee
When you’re ready to offer a promotion to one of your employees, how you go about offering it is incredibly important. A clear, unbiased process—combined with clear, consistent communication—is what will mean the difference between a morale drain and a morale boost to the rest of your team.
1. Determine who is responsible for giving employee promotions
Your employee promotion policy should be in writing, and it should make everyone’s roles and responsibilities clear. If you want managers to be putting their recommendations forward, make sure they’re aware that you expect this of them. Whether it’s a manager or company leadership who’s responsible for reviewing and approving candidates and pay increases, clarity and good communication are a must.
Your employee promotion policy also needs to ensure you stay compliant with U.S. Equal Employment Opportunity Commission (EEOC) laws and guidelines. When hiring decision-makers are held accountable in this way, it helps communicate that your promotion process is fair and non-discriminatory.
Homebase’s HR option can help answer your questions on hiring and promotions. From helping you stay compliant, to communicating with the rest of your team, to completing paperwork, make things easy on yourself by working with professionals.
2. Determine who’s eligible for an employee promotion
Make the decision to promote an employee—or not promote them—an objective and fair one. Lay out the guidelines under which an employee might be eligible, then decide accordingly which employees most deserve a promotion. Your guidelines could include:
- Excellent performance
- High potential
- A long tenure with your company
- The time that’s lapsed since their last promotion
3. Figure out when it’s a good time to give a promotion
Is another of your employees going to be leaving or switching roles? It’s probably time to direct your focus to your employees who’ve been showing promotion potential. Busy seasonal period coming up? Wait until your active season is behind you before adding extra pressure on managers to review promotion candidates. June and July are the most popular months for U.S. workers to receive promotions, falling before the popular August holiday weeks. And January, the time of new beginnings and when performance evaluations often happen, is a popular time for promotions as well.
4. Decide which of the 3 types of promotions you’ll be doing, and whether the process will be open or closed
Are you going to be offering a vertical promotion, a horizontal promotion, or a dry promotion? (Remember: employees tend to dislike—even turn down—dry promotions.) Are the skills required for the role transferrable ones, or are they highly specific? Do you want to spend more time on a larger pool of applicants, or do you want a narrower search that takes less time? Your answers to these questions will tell you if you want an open or closed promotions process for your candidate search.
5. Announce the promotion
Once you’ve decided to promote an employee, decide how you want to announce it to your company. Before announcing the promotion staff-wide, you might want to first meet with the team members who will be affected by it most. Gauge their reaction and take in any feedback, then make a public announcement to your wider team.
When you make the all-team announcement, it’s obviously a moment to congratulate the person for all the hard work that got them here. But make sure the moment isn’t solely about celebrating the promoted employee—also take the chance to thank everyone who made the promotion opportunity possible.
It’s important to make a big deal out of the promotion, and to clearly explain your reasons for giving it. This is a chance to inspire your other employees—and to demonstrate how they could follow their coworker’s example.
An employee promotion announcement should include:
- Your congratulations for the promoted employee
- The reasons for the promotion
- The employee’s old role and new role
- The employee’s achievements
- An invitation for the team to offer their personal congratulations
6. BONUS STEP: Lead transition of your newly promoted employee by generating buy-in from other employees
Once the promotion has been made, make a point of generating buy-in from the rest of your employees. Seize this opportunity to encourage your team members to support the newly promoted employee. Don’t just rehash things from the job description, but make sure that specific—maybe even inspiring—examples are widely known about how the person met the criteria. Then the wider team can see how the promotion is benefiting them, and how they can rely on the person going forward.
An employee promotion should help your team members reconnect with their aspirations, feel a sense of trust in their team leaders, and get excited about the direction their team is going.
Employee promotions made easier with Homebase
From beginning to end, so many factors play into promoting your hourly and shift workers. It’s an exciting moment for you as a business owner, and making informed decisions is vital. It’s also time intensive—and that’s where Homebase comes in.
Manage employee documents, get performance tracking, plus HR and compliance support to help you identify and promote your star employees.
Homebase’s promotions management tools help you automate and customize all these processes, letting you promote your team members with ease.
Simplify employee promotions. Try Homebase for free.
Remember that this information is not legal advice. When in doubt, always consult an employment attorney with your specific questions about labor law compliance and consequences.
Employee promotion FAQS
What is an employee promotion?
Employee promotion is the process of hiring an employee for a senior role at work. Along with an increase in status and responsibility, a promotion often brings an increase in salary, benefits, and decision-making power.
Why are employee promotions important?
Employee promotions are important for many reasons. They’re a sign that your company rewards hard work and offers growth opportunities. They increase employee retention, reduce hiring costs, and shorten onboarding. Internal promotions also boost productivity and motivation among your employees, create healthy competition, help foster leadership qualities, and increase the chances that the person will be a success in the role.
What should I look for in an employee when considering giving them a promotion?
When considering a candidate for a promotion, you should look for someone who has a track record of high performance, shows initiative, takes ownership over problems and decisions, can adjust to changing priorities, receives feedback well and uses it to grow, and collaborates effectively with your other team members.
What are the steps to promote an employee?
The steps to promote an employee include: determining who is responsible for giving promotions, determining who is currently eligible for an employee promotion based on your chosen guidelines, figuring out when is a good time to give a promotion, deciding what type of promotion you will be doing, announcing the promotion, and leading the transition of your newly promoted employee by generating buy-in from other employees.