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  • What is the difference between an equity adjustment and a promotion?

Jan 2007

Q. I was recently promoted to a higher position and given a form stating my change in position and salary. However, the form said I was receiving an "equity adjustment" as oppposed to a promotion. What is the difference? Was it my boss's way of cheating me out of a higher percentage increase or vice-versa? Also, what is a typical percent increase when promoted to a higher position?

A. An equity adjustment is typically given to an employee when the company wants to bring his or her salary in line with either the internal or external "competitive wage." A promotional increase, on the other hand, is normally given to an employee when he or she has been promoted or moved into a new job.

I'm not sure why your company decided to check the "equity adjustment" box over the "promotion" box. One reason could be that an equity adjustment allowed the company to deliver a higher increase to your base salary than they would in offering you the standard promotional increase. For instance, a promotional increase can range anywhere between 5 and 15 percent, depending on what the job is and where it falls within the organization. But if your salary is far below market, then a 15 percent promotional increase may not be adequate to raise your salary to the minimum of the new pay grade. Consequently, the company would give you an equity adjustment rather than a promotional increase to bring your salary to the minimum of the new pay grade.

Nevertheless, there is no hard-and-fast rule for equity and promotional adjustments. It wouldn't be a bad idea to speak to your HR department to learn the company's policies on equity adjustments and promotional increases.

Good luck.

- Erisa Ojimba, Certified Compensation Professional

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