Promotions of Employee - Purpose and Advantages of Promotion - Bases for Promotion

In simpler terms, promotion refers to upward movement in present job leading to greater responsibilities, higher status and better salary. Promotion may be temporary or permanent depending upon the organizational requirement. According to Clothier and Spriegel,

“promotion is the transfer of an employee to a job which pays more money or one that carries some preferred status.” 

In the corporate sector employee promotions doesn't make much difference as that of in government sector. In the government the word promotion is the ultimate desire for an employee for the service rendered by him in the organisation and this is the only way for an employee career development in the government sector. Promotion is the ultimate motivating factor for any employee because moves employee forward in hierarchy of concern organisation added with additional responsibility, higher respect, honour, with increase in grade pay and allowances.

In countries like India, employee promotions are withhold by employers if any enquiry is pending on concerned employee due to his disobedience of duties or misuse of his powers especially in government departments. Until clearance of enquiry pending before COMPETENT AUTHORITY on concerned employee promotion will not be given. It is the responsibility of employee on whom enquiries pending should prove his innocence before concerned competent authority.

Employers should not show any discrimination between men and women with regard to promotion according to section 5 of Equal Remuneration Act, 1976. 

Purpose and Advantages of Promotion

Promotion stimulates self-development and creates interest in the job. According to Yoder, “promotion provides incentive to initiative, enterprise and ambition; minimizes discontent and unrest; attracts capable individuals; necessitates logical training for advancement and forms an effective reward for loyalty and cooperation, long service etc.” The purposes and advantages of promotions are to:
  • recognize employee’s performance and commitment and
    motivate him towards better performance;
  • develop competitive spirit among employees for acquiring knowledge and skills for higher level jobs;
  • retain skilled and talented employees;
  • reduce discontent and unrest;
  • To fill up job's vacant position that is created due to retirement, resignation or demise of an employee.In this case next senior employee will be promoted to the vacant job.
  • utilize more effectively the knowledge and skills of employees; and
  • attract suitable and competent employees.

Favouring family members leads to employee disengagement: Study

In a study conducted by TJinsite, research and knowledge arm of, a large proportion of employees expressed that competency should be the most important criteria for employment or promotion. And, they feel disengaged when relatives are given a key position or promotion, bypassing talented employees. The study highlighted that nepotism policies -favoritism towards family members- degrade level of commitment, loyalty and the sense of ownership amongst employees and leads to higher attrition rate.

"Nepotism is most commonly seen in family run businesses. And, family run businesses (FRBs) constitute most businesses in India. While favouring family members is very common in family businesses, it runs the dual risks of demoralising non-family members and increasing complacency among family members. The after effects of favouring family members for a senior level position on the existing employees are severe

Types of Promotions

Different types of promotions are discussed below.

a) Up or Out Promotion: In this case, an employee either earns a promotion or seeks employment elsewhere. Out promotion usually leads to termination of employee and joining some other organization in a better position.

b) Dry Promotion: In this type, promotion is given in lieu of increase in salary. For example, when an university professor is made Head of the Department, there is no increase in salary.

c) Paper promotion: Paper promotion happens on seniority of employee in government sector having different departments. Paper promotion is an employee promotion given to the employee belonging to the parent department, but indeed working in another department on transfer, on request of employee or due to exigency of work. Paper promoted employee draws salary pertaining to job in another Department, but not according to promotion’s job in the parent Department.

The reason for giving paper promotion is, generally in government sector, employee promotion will be given in order of seniority of employees subjected to the vacancy position created. Whoever is most senior employee amongst all employees in the same cader, out of them top senior employee will be given promotion. When a top senior is working in another Department, in such cases to fill up the vacancy position, promotion on paper will be given to such employee, because he’s not occupying job in the parent Department. Subsequently promotion will be given to the next top senior who is working in the parent Department. Paper promoted employee draws salary pertaining to the job of another Department only but not according to the job, which got paper promoted in the parent Department.

The main objective of a promotion is to protect the right, seniority of an employee and reserve his/her promotion seat in the parent department when an employee reverts to his/her parent department.

Facts [+]

Morning Star is a tomato processing company based in California, with revenues of $700 million and over 400 employees. These unremarkable facts would not qualify for a cover story in Harvard Business Review by management guru Gary Hamel (December 2011). What makes the company remarkable is that it has no bosses, titles or promotions. Can companies be managed without bosses, titles or promotions? More >>

The Domino's Pizza chain focused on its store managers to reduce worker turnover from a staggering 158% down to 107%, according to a article. To accomplish this, Domino's HR department deployed a store manager strategy of hiring more selectively, coaching them on how to create better workplaces, and motivating them with the promise of stock options and promotions.

Promotion Program and Procedure

Every organization should make advance plans for promotion programme. A carefully planned promotion programme has four elements:
a) formulation of promotion policy,
b) identification of promotion channels,
c) promotion appraisal, and
d) centralized records. We shall discuss each element in detail.

a) Formulation of Promotion Policy:
Each organization needs to maintain a balance between the internal sources of personnel promotion and external sources by means of recruitment. Hence, promotion must be based on consistent, fair and clear cut policy. The National Institute of Personnel Management (NIPM) has suggested a promotion policy on the following lines:
  • Encouragement of promotion within the organization instead of looking outside to fill vacancies in higher places.
  • An understanding that ability as well as seniority will be taken into account in making promotions. Ability, efficiency, attitude, job performance, physical fitness, leadership, experience, and length of service are some of the factors considered in making promotions.
  • Drawing up an organization chart to make clear to all the ladder of promotion. Where there is a job analysis and a planned wage policy, such chart is quite easy to prepare.
  • Making the promotion system clear to all concerned who may initiate and handle cases of promotion. Though departmental heads may initiate promotion, the final approval must lie with the top management, after the personnel department has been asked to check from its knowledge whether any repercussion is likely to result from the proposed promotion.
  • All promotions should be for a trial period to ascertain whether the promoted person is found capable of handling the job or not. Normally, during this trial period, he draws the pay of the higher post, but it should be clearly understood that if “he does not make the grade” he will be reverted to his former post and former pay scale.
b) Promotion Channels:
Promotion channels should be identified and recorded on paper. This process is related with job analysis and career planning of an organization.

c) Promotion Appraisals:
The promotion of an employee is entirely dependent upon his/her performance appraisal outcome.

d) Centralised Records:
The education, experience, skills, abilities and evaluation of all employees should be recorded and maintained in a centralised manner by the department of the organization, because basing on these attributes, promotion is given to an employee.

Bases for Promotion

Promotion is given on the basis of seniority or merit or a combination of both. Let us discuss each one as a basis of promotion.

Seniority as a basis: It implies relative length of service in the same organization. The advantages of this are: relatively easy to measure, simple to understand and operate, reduces labour turnover and provides sense of satisfaction to senior employees. It has also certain disadvantages: beyond a certain age a person may not learn, performance and potential of an employee is not recognized, it kills ambition and zeal to improve performance.

Merit as a basis: Merit implies the knowledge, skills and performance record of an employee. The advantages are: motivates competent employees to work hard, helps to maintain efficiency by recognizing talent and performance. It also suffers from certain disadvantages like: difficulty in judging merit, merit indicates past achievement, may not denote future potential and old employees feel insecure.

Employees who reach office early more likely to get promoted

LONDON: Want to bag a promotion at work? Reach office early!

Employees who arrive at work earliest are most likely to get a pay rise, regardless of their performance and total time worked, according to a new study. Researchers also found that those who turn up late and leave the office last are more likely to be overlooked for promotions.

"We think it's a cultural thing. Those who turn up early are thought of as hard workers, while if you turn up later, you're perceived as lazy," said Kai Chi Yam, who led the research at the University of Washington.

Researchers surveyed 149 pairs of employees and managers about when each arrived at work and how the manager rated the employee's conscientiousness and performance.

People who started later were rated worse, particularly when their managers were early risers. There was no evidence that people who went home early were seen as less productive.In a second experiment, students took the role of a manager in a fictional scenario to rate staff performance.

They were told that the employees' performances were identical but their start times varied. Late start times led to lower ratings, even though productivity and total hours were the same.

The study is to be published in the Journal of Applied Psychology.

INDIA: Insurance Regulatory and Development Authority (IRDA) employees approached Andhra Pradesh High Court on the irregularities in their promotions. Aggrieved employees allege that their promotions are not being done in accordance with prescribed regulations, which prescribes merit, suitability and seniority of employee should be considered while promotions. In response to this, the honourable High Court of Andhra Pradesh issued interim stay on the promotion of employees.
The economic Times, 22-dec-12

Seniority-cum-Merit as basis: As both seniority and merit as basis suffer from certain limitations, therefore, a sound promotion policy should be based on a combination of both seniority and merit. A proper balance between the two can be maintained by different ways: minimum length of service may be prescribed, relative weightage may be assigned to seniority and merit and employees with a minimum performance record and qualifications are treated eligible for promotion, seniority is used to choose from the eligible candidates.

Facts [+]

Employees have no "vested" right to promotion
Feb, 2012, NEW DELHI [India]: The Delhi High Court said though employees have no "vested" right to promotion but they should not be deprived of it "arbitrarily" and without any reasonable ground by their employers.

"It is true that no employee has a vested right for promotion but respondents (employer) cannot act arbitrarily and without any reasonable excuse defer the meeting of Departmental Promotion Committee (DPC) and thereby deprive the employee of his legitimate expectations for being considered for promotion to a post if he is eligible for being promoted," a bench of justices B D Ahmed and V K Jain said.

March, 2012: In the other case women officers recruited in short service commission of Indian Air Force, filed a petition in the Delhi High Court for making them eligible for promotion and permanent job. The High Court issued orders to Indian Air Force in favour of women officers to make there  jobs permanent and promote them to the higher rank with all consequential financial benefits .


Demotion refers to the lowering down of the status, salary and responsibilites of an employee. Demotion is used as a disciplinary measure in an organization. The habitual patterns of behaviour such as violation of the rules and conduct, poor attendance record, insubordination where the individuals are demoted. Beach (1975) defines demotion as “the assignment of an individual to a job of lower rank and pay usually involving lower level of difficulty and responsibility”.

Causes of Demotion

Demotion may be caused by any of these factors:
  • Adverse business conditions: Employees may be demoted because of recession faced by company.
  • Incompetency of the employee: It happens when an employee finds it difficult to meet the required standard.
  • Technological changes: When employee is unable to adjust with any technological change made by the company.
  • Disciplinary measure.
Yoder, Heneman, Turnbull and Stone (1958) have suggested a fivefold policy with regard to demotion practice.
  • A clear and reasonable list of rules should be framed, violations of which would subject an employee to demotion;
  • This information should be clearly communicated to employees;
  • There should be a competent investigation of any alleged violation;
  • If violations are discovered, there should be a consistent and equitable application of the penalty, preferably by the immediate supervisor;
  • There should be a provision for review. (In a unionised case, this will be automatic via the grievance procedure; in a non-unionised case, the employer will need to make other provisions for review).