Keeping Up-and-Comers From Leaving: How Promotions Tie Into Employee Retention

Two employees talk while sitting at a table near a window in an office.

It's a conundrum many organizations face: You want to keep your star employees by propelling them upward and developing new skills — but sometimes, they up and leave. ADP's vice president of talent management suggests the most effective way to improve employee retention is to think about promotions with more strategy and intention.

At first glance, ADP Research Institute's report "The Hidden Truth About Promotions" confirms a startling but common observation about employee retention: It's not unusual for people to leave an organization after receiving a promotion. In fact, researchers found that being promoted led to a nearly two-thirds increase in the risk a person would leave their job.

So, no more promotions ever, right?

No, that's certainly not the case. But this finding does have ADP Vice President of Talent Management Sandy Thomas saying leaders should be thinking more critically about promotions and how they're used effectively.

"Too often, we assume that the promotion or merit increase is a moment of celebration that guarantees employee retention and locks talent into a role," says Thomas. "But in reality, our work to retain that individual should have started much, much sooner."

Thomas suggests looking at the data with a nuanced eye. Think beyond the promotion to consider what else accompanies a new opportunity: Did your employee want to be promoted? Will they thrive with their new responsibilities? Will you be able to support them through the learning curve of essentially a brand-new role?

Read on to explore best practices when you're considering promotion and merit increases as a means for employee retention.

Weighing promotions vs. merit increases

"Organizations tend to misunderstand or misuse promotions and merit raises," says Thomas. "From our research, we know that a person's commitment to their employer depends in part on whether they feel recognized for excellent work. But we need to remember that promotion is just one tool — and not always the most appropriate tool for every individual."

For people who enjoy their work and want to continue to excel in their role, a promotion fundamentally changes their day-to-day work. In those situations, the best employee retention strategy may be to recognize a job well done with a merit raise or bonus rather than a promotion.

As Thomas points out, these tools serve different purposes. Merit increases offer a lateral incentive to acknowledge performance. Promotions offer a vertical incentive to acknowledge growth and preparedness for a new challenge.

Thomas draws a connection here between unwanted promotions and attrition. For example, someone who was promoted because of excellent performance might find they don't want the new role after all. Instead, they may realize they want to expand their skill set and enhance a specific area of expertise rather than step into managing a team, expanding their footprint or doing different kinds of work.

Employees need structured support to continue their high performance after receiving a promotion, otherwise they might flounder in the new responsibilities and feel like it's their fault and leave."

Sandy Thomas, VP of talent management, ADP

Promoting in a way that supports employee retention

The most effective way to improve employee retention, Thomas says, is to offer merit increases and promotions strategically and support promotions more intentionally. If you don't want the people you promote to leave, here are some key considerations:

Make sure they want the promotion

"Before you hand over a promotion, you have to understand what the individual wants from a growth and career planning perspective," Thomas says.

From large multinational companies to smaller organizations, leaders should create opportunities to ask questions before promoting talent, such as:

  • How do you want to grow?
  • What projects interest you?
  • What work do you love?
  • What work completes you?

Thomas recommends check-in and conversation tools that address these key questions as part of an integrated engagement and performance solution. If you're doing it right, employees will share their preferences and make it clear whether they would welcome a promotion or would rather explore other career development options.

Support new promotions like new hires

Leaders can sometimes treat new promotions like just another day on the job. Thomas points out, however, "A new role is essentially a new hire — talent needs clear expectations and support to succeed."

The reality of being promoted is that the employee life cycle restarts. It can be disorienting for employees to transition internally to a new job but not receive the same managerial and team support that someone from outside would.

Thomas notes that it's important to set clear expectations from the start. This can help talent persevere through the discomfort of a promotion, ultimately improving employee retention.

Monitor the new promotion with onboarding

"Employees need structured support to continue their high performance after receiving a promotion," Thomas says, "otherwise they might flounder in the new responsibilities and feel like it's their fault and leave."

What that looks like in practice are new-hire-like support strategies for the people you promote, such as a 30/60/90-day onboarding program. It can pay off to put time and structured support into the promotional experience. Specifically, consider making sure your high performers know they may falter for the next few months as they adjust to the new role, and that it's not just expected but OK.

Making a plan to keep your up-and-coming talent

Should you stop promoting people because it increases the risk they'll leave? No, not at all. But you should look at the bigger picture to understand who wants to receive a promotion and how to prepare them for it well in advance. At the end of the day, a promotion or raise should be tailored to the person receiving it based on conversations, clear expectations and an eye to long-term employee retention.

Learn more about the nuances of promotions and merit raises in "The Hidden Truth About Promotions," the quarterly Today at Work research report from the ADP Research Institute.