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Promoting Your Workforce as a Small Business Owner

Promoting Your Workforce as a Small Business Owner

This article was updated on September 12, 2018.

Handling employee promotions is a balancing act. You need to regularly reward good employees and groom them for more responsibility while making sure they can actually handle the requirements of a new role. While there are no absolute rules for promoting your workforce, there are some guidelines that can help with your decisions.

Frequency of Promotions

There are various ways to judge when someone is ready for a promotion. Some companies simply look at tenure. Others require an employee meet certain performance goals before a promotion. All organizations should also consider whether someone has the right abilities for a new position. For instance, a great salesperson might not be a great manager.

As you determine how to reward hard work with new positions, remember that employees do expect regular promotions over time. Many workers expect promotions every one to two years, including 40 percent of millennials, according to the Society for Human Resource Management. An employee who has not been promoted within the last two years may be more likely to look for another position outside the organization.

It may help to lay out clear criteria as to what employees must accomplish to receive a promotion, whether it's length of service, performance goals, etc. This helps keep employees focused on goals rather than on looking for another job. You can also use vacations and leaves of absence as an opportunity for an employee vying for a higher position to step in temporarily and prove their skills.

Benefits and Job Titles

Ultimately, you may not have enough promotion opportunities to meet all employees' expectations. In this case, you may consider offering better benefits instead as incentive for your employees. Benefits such as more paid time off, reimbursements for commuting expenses and even gift cards are both easy to offer and show appreciation for your employees.

You may also offer key employees a better job title, even if you can't afford a pay increase immediately. Use this strategy sparingly, however, because at some point you dilute the value of titles in your business and employee classifications may become blurred, especially in a small workforce. In addition, giving an employee a better title makes it that much easier for them to find a better job elsewhere.

Adjusting to Millennials

This advice is particularly important if you're looking to hire and retain millennials. Millennials typically have the highest expectations for promotions and are the most likely to leave jobs that don't offer leadership opportunities, according to Business Insider. In addition, many struggle with traditional performance reviews. Their biggest complaint is that annual performance reviews don't give them enough feedback; they want more regular input as to what they can improve and where they are going with their careers. Make an effort to provide all employees, including millennials, with updates on their performance and guidelines for promoting your workforce.

Handling promotions will always be a tricky issue, but with the right approach, you can help manage employee expectations and run your business as effectively as possible.