Seeking Advice: How to Determine the Best Promotion Rate for Our Competitive System?

Dear all,

Thank you for your kind contribution. I would like professional assistance on what would be the most suitable promotion rate.

Things to consider:

1. The system of promotions is by positions only; therefore, no employee shall be promoted to the same position. He or she must be qualified to be promoted to a higher position/title with a higher salary rate.

2. The system of promotions is based on competition. Therefore, a position must be advertised.

3. Turn-over rate & promotion rate

2019:
Turn-over rate: 5%
Promotion rate: 3%

2020:
Turn-over rate: 6.5%
Promotion rate: 3.5%

My questions are as follows:

Based on the data and the system of promotion mentioned above, what is the most appropriate promotion rate in this case?

If I would like to put a percentage cap for promotions to each department, do I take the percentage from the total of vacancies in each department or the number of employees in the department?

Thank you for your help and kind efforts.

Dear Mohammad-Haqbani,

The replies to the questions are given below. However, in addition to the replies to the questions, comments on a few sentences of your post are also provided.

System of promotions by positions only

1: The system of promotions is by positions only; therefore, no employee shall be promoted to the same position. He or she must be qualified to be promoted to a higher position/title with a higher salary rate.

Comments: - Well, sir, there seems to be a fundamental misunderstanding of the concept of promotion. The definition of promotion is "an act of raising in rank or position." It is possible for the position to remain the same while a promotion occurs. For example, if a person joined an organization as a GM (HR) and was also the Head of HR, and over time, as the organization grew, the management promoted him to VP (HR), the position of Head HR remained the same, but a promotion took place.

System of promotions based on competition

2: The system of promotions is based on competition. Therefore, a position must be advertised.

Comments: - Your statement raises the question of whether to follow "merit" or "seniority," depending on the size of your organization. Larger companies tend to follow merit-based promotions, while smaller ones might lean towards seniority-based promotions.

Turnover rate and promotion rate

3: Turnover rate and promotion rate

Comments: - Why are you linking these two factors? While it's true that people may get promoted when their seniors leave, this is not the sole reason for employee promotions. Business growth, expansion, new product development, and market penetration are also significant factors that drive promotions.

Questions on promotion rate

My questions are the following:

Based on the data and the promotion system mentioned above, what is the most appropriate promotion rate in this case?

Comments: - Why do you want to correlate the promotion rate and attrition rate? Promotions depend on various factors, and decisions should be made based on market conditions, rather than trying to establish a fixed promotion rate.

If I would like to set a percentage cap for promotions in each department, should I base the percentage on the total of vacancies in each department or the number of employees in the department?

Comments: - Let the organization's needs determine the number of promotions. Imposing a cap on promotions could lead to bureaucracy or favoritism. People strive for career growth, and limiting promotions may hinder their career aspirations.

Thanks,

Dinesh Divekar

Dear Mr. Dinesh Divekar,

Thank you for your kind reply. However, I would like to point out that we have a yearly merit increase based on employee performance, but they are capped. This means if an employee does not get a promotion within 5 years, the merit increase will stop. Furthermore, the definition of a promotion used in my organization is that any position movement for an employee that results in a higher salary or benefits is considered a promotion.

The percentage cap for promotions to each department is in accordance with the organization's policy. However, what I'm discussing is what a fair percentage would be appropriate. That's why I'm taking into consideration the turnover rate because promotions are part of rewards, and if the turnover is high and increasing, the best approach is to increase the percentage of promotions for each department.