Don't count on a pay raise to go with a promotion

SINGAPORE - Hoping for a hefty salary raise to go with that promotion this year? Don't count on it.

In fact, research conducted by recruitment firm Robert Half has revealed that a pay raise after a promotion is more likely to be the exception rather than the rule.

The study, which surveyed 100 chief financial officers and finance directors in Singapore, found that just 17 per cent, or less than one in five, companies in Singapore, are guaranteed to give a pay raise following a promotion.

"Promoting without a pay rise is far more common in Singapore than people might think," commented Matthieu Imbert-Bouchard, managing director at Robert Half Singapore.

Perhaps surprisingly, medium-sized companies (between 150 and 499 staff) are more inclined to give a pay raise after a promotion than small (fewer than 150 staff) or large firms (500 or more staff).

21 per cent of medium-sized companies surveyed stated they would always raise the pay of a promoted employee, compared with just 15 per cent of both large and small companies.

More than four in 10 (43%) finance leaders said that the main reason for not attaching a salary increase to a promotion is because they want to assess an employee's performance first.

Just over one in five (22%) cited a lack of financial resources, while 11 per cent said that a promotion was given to fill a position urgently.

Interestingly, 7 per cent of firms stated that they did not raise the salary of a promoted employee because their remuneration was already too high for the previous position.

Mr Imbert-Bouchard noted that while employers needed to give their top performers career advancement opportunities to retain them, pay rises remain an effective retention tool.

"While receiving a promotion is a clear sign of confidence in an employee, taking on a more senior role and more responsibilities without getting a salary increase can negatively impact an employee's motivation which in turn can influence their decision to change jobs," he said, adding that many employees are prepared to work hard knowing the reward will be a promotion with a better salary and bonus.

"When employees don't receive a salary increase when promoted, it is vital to explain the reason, as well as potential targets that the employee needs to reach within a certain timeframe in order to receive a salary rise," he advised.

seanyap@sph.com.sg