Understanding Promotion in HRM: Process, Benefits & Types

Promotion in HRM

How do HR departments decide who deserves a promotion?

Promotion in HRM is moving a deserving candidate up the corporate ladder. It is a talent retention strategy and a performance motivator. It is a long-term investment in the careers of employees.

Promotion induces greater responsibility, increased salary, improved job titles, and enhanced decision-making power. It is different from hiring. Promotion is internal advancement. It is a faster and more cost-efficient process to fill a vacant position.

Process of Promotion in HRM

The process of HRM incorporates five steps, each explained as follows:

Step 1: Workforce Planning and Identifying Promotion Opportunities

In the first step, the HR department undertakes promotion planning and identifies vacancies. It looks over the requirements, vacancies from resignations, retirements, expansions, or restructuring.

Step 2: Setting Eligibility Criteria and Promotion Policy

HRM refers to the promotion policy and defines eligibility parameters. The commonly used parameters are work performance, experience, seniority, skills, leadership qualities, behaviour and disciplinary records to ensure transparency and fairness.

Step 3: Performance Appraisal and Evaluation Criteria

Regular evaluations help an organisation identify high-performing employees. Some evaluation methods can be talent reviews, peer reviews, and 360-degree feedback.

Step 4: Assessment

Assessment for promotions is complete after conducting internal assessments, interviews, and aptitude and skill tests. At times, HR conducts an aptitude and skill test to ensure transparency and fairness and select candidates on merit.

Step 5: Senior Management Approval, Announcement and Documentation

The HR approval process involves approval from senior management to ensure alignment with the objectives and goals of the organisation. The promotion documents are referred for approval.

After careful evaluation, the decision to promote is taken. It is communicated by e-mail, intranet, team meeting or HR dashboards.

The promotion is incomplete without updating the HRIS portal of the organisation. The new designation, job responsibilities, and KPIs should reflect the recent promotion.

This update indicates the successful completion of the promotion process in HRM.

Benefits of Promotion in HRM

The benefits of promotions in HRM sometimes cannot be measured in money. It improves business by prioritising top employees. It boosts the organisation's brand and gives a competitive edge in business.

Increases Employee Morale and Motivation

Promotion is a powerful psychological motivator. It enhances employee morale and motivates them to give their 100%.

Boosts Retention

Promotions improve the retention ratio, or should I say, promotion is prima facie a strategy to retain top employees.

Cost-Effective Talent Management

Retaining and promoting employees is cost-efficient. The total cost of hiring new employees, which incorporates administrative costs, training costs, and the opportunity cost lost, makes a dent in the company’s finances.

Career Growth and Employee Development

Promotions encourage refined professional expertise and motivate skill development. Sometimes it mimics a live learning and development program, giving employees real-time experience.

Perks and Security

Promotions in HRM increase perks and salaries. They give financial freedom and security.

Types of Promotion in HRM

Promotions are transparent, fair, strategic, and effective. Therefore, specific goals determine the types of promotion. In general, they are horizontal, vertical, dry, open, and closed.

Horizontal Promotion

Horizontal or lateral promotion, as the name suggests, is a change in role and responsibility within the same hierarchy. It celebrates commitment. It becomes a playground for employees to broaden their skill sets and prepare themselves for vertical promotions.

Vertical Promotion

Vertical promotion is the most traditional, where the candidate moves upwards within the organisational hierarchy. It incorporates a new job title with greater decision-making power, along with an increased salary. It mirrors career growth.

Dry Promotion

As the name suggests, there is no monetary benefit for employees. It increases responsibilities, decision-making power, and workload. It either depicts the financial constraints of the organisation or is used as a metric to ascertain the potential of its employees.

Open Promotion

Open promotion is a transparent, merit-based selection where all employees have equal opportunity. Anyone can apply and participate if they meet the eligibility criteria.

Closed Promotion

Closed promotion is the opposite of open promotion. It is less transparent and subjective. Closed promotion is intended for filling specialised or key roles.

Pluxee Rewards and Recognition

Align promotions along with our Rewards and Recognition suite. It motivates employees and sets the bar very high. At Pluxee, we celebrate employees' brilliance and fuel their journey to excellence.

Reward your employees with our 100% digital rewards solution. Pluxee offers tailored gift cards that are accepted at over 5 million RuPay-enabled outlets. Our Pluxee India app is the highest-rated employee benefits app, offering perfect solutions for special occasions.

Give a welcome start to the employees by gifting a Pluxee 2-in-1 Card.