Promising or giving an employee a promotion can increase worker loyalty and retention, but it can also cause hard feelings, decreased morale, turnover and even legal problems if not handled correctly. A worker’s length of service, family problems or personal financial situation should not be major factors in justifying a promotion. Awarding employee promotions based on objective, work-related criteria will help you spend your labor dollars wisely and avoid the problems caused by subjective recognition.

Increased Value

One justification for giving an employee a promotion is that the staff member has made an effort to make himself more valuable to your company. If moving a worker to a new position will allow him to handle more responsibility and decrease your costs or increase your sales, this is an objective example of a justifiable promotion. Look for ways to evaluate an increase in employee value, such as helping her earn a new certification, learn to use a particular piece of software or improve some other critical skill.

Decreased Attrition Costs

Sometimes giving an employee a promotion won’t improve your business, but not giving him the promotion might cause him to leave your company, costing you more than it does to promote him. Calculate the cost of recruiting and training a replacement, the loss of productivity, potential loss of business an employee takes to a competitor and the affect of a departure on your company morale to determine the real cost of not giving an employee a promotion.

Morale

Many employees are more likely to stay with a company if they feel they have a chance to improve their careers. Giving longtime employees promotions not only keeps them working for you, but it also sends a message to the rest of your staff that hard work and loyalty can result in moving up. Set year-end review criteria in advance to let employees know what’s expected of them.

Productivity

If promoting a worker leads to improved efficiencies, decreased costs or increased sales, you have an objective business reason for justifying the promotion. Sometimes this means offering a horizontal promotion to another department or area. For example, you might move a receptionist to your sales department if she demonstrates superior product knowledge or an aptitude for customer service. You might shift a finance person to human resources if he develops a thorough understanding of your benefits program.