Would you discuss the risks of promoting a deserving employee (title change) but not increasing salary due to current economic conditions?
A promotion is when an employee is moved into a job with greater scope and responsibility than his or her current job. Promotions in and of themselves do not mean a monetary increase in salary. But in general, companies adjust salaries with promotions when the monetary value of the new job is higher than the value of the job the incumbent currently holds.
It is understandable that a company might not be able to afford to offer an employee more money in the current economic conditions. If the employee's current salary without an adjustment is competitive with the market rate of the new job, you don't need to offer an increase.
However, if the employee's salary is below the market value of the job to which he or she is being promoted, I would offer an adjustment to make the employee's pay competitive.
Ask yourself how much it would cost to replace the incumbent if he or she left the company to take the same promotion somewhere else. Look at the implications of not rewarding the employee for doing a job you concede is beyond his or her current classification.
As an alternative, consider whether a bonus is appropriate until you can give the job title and monetary increase the employee deserves.
- Erisa Ojimba, Certified Compensation Professional