February 12, 2018 – While we all might think at times that a job is all about the pay check, a new Korn Ferry survey reveals that nearly half of professionals actually prefer recognition over extra compensation. The report, which surveyed more than 850 professionals, found that 46 percent would prefer a promotion with no raise, with 54 percent saying they would prefer a raise with no promotion.
“Let’s be clear, appropriate compensation is key to a professional’s job satisfaction, but being recognized for a job well done through a promotion is also a critical factor in motivating and retaining talented employees,” said Tom McMullen, senior client partner at Korn Ferry. “A lack of career development opportunities is the No.1 reason why professionals leave a company. Organizational leaders need to put development and career plans in place at all levels so employees see a path for advancement and progression.”
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Many organizations, unfortunately, are failing to do an adequate job of creating clear advancement opportunities, according to the study. More than half (57 percent) of respondents who failed to get a promotion within the last 12 months cited “bottleneck or nowhere to go” as the main reason. Nearly one-quarter (24 percent) said “office politics” got in their way of moving up the ladder.
Thirty-five percent of respondents said they did receive a promotion within the last year, and nearly half (47 percent) said they expect to receive a promotion in the coming year.
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If they were passed over for a promotion, nearly one-third (29 percent) said they would be on the job hunt, either immediately or as a passive job seeker.
In terms of timing for promotions, 46 percent said they thought it was appropriate to be promoted after two to three years on the job. About a quarter (26 percent) said they should get a promotion after one to two years in a role, and six percent felt they should be promoted even if they’ve been on the job for a year or less.
The Next Step
When asked what is the most likely action you would take if you wanted a promotion, 83 percent said they would have a conversation with their boss and identify growth areas; 15 percent said they would take on more responsibility; two percent said they would get a new job offer and hope their company counters with a promotion; nobody said they would work longer hours.
The Korn Ferry report also asked respondents what they would do if they were passed over for a promotion. Sixty-seven percent said they would identify the reasons and work to improve; 19 percent said they become a passive job seeker; 10 percent say they would immediately look for a new job; and four percent said they would take no action.
“The key is ongoing development and coaching to ensure the professional is receiving feedback in terms of how they are doing in their current role and what they need to do to be ready to take on added responsibility,” said Mr. McMullen. “And even if an employee is not yet ready for the next role, knowing that there is potential for a promotion to a more challenging role is an excellent way to retain top talent.”
Promotion Over Pay
While the corporate ladder may no longer be so steep for some, many workers, according to a number of reports, still think they deserve a promotion — and this is leading companies to feel pressured to hand out “better” titles to make up-and-coming staff feel more valued.
There’s no simple answer as to why C-titles are currently proliferating at such a rapid rate. Partly it’s a response to the lingering financial crisis from 2008. The days of easy money and ever-expanding GDP are gone – maybe forever – and it’s cheaper and easier to grant an important-sounding title than it is to give someone a fatter pay package.
“The titles here help to reflect the personality of the organization and can be used as a way to attract talent on that basis alone,” said Sally Drexler, an Odgers Berndtson partner in Los Angeles. “Sometimes these titles are very flippant but certainly have a role to play and resonate with the consumer and prospective employees.”
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From a compensation perspective, awarding employees C-suite titles is certainly a much less expensive way to attract and retain key talent than paying a huge salary increase, Ms. Drexler said. Salaries, however, must reflect these titles to some degree, she added.
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“A small salary increase is usually made as a token effort in the hopes that the employee will see the title as more attractive to the outside world and important when managing their own career trajectory,” Ms. Drexler said. “New C-suite titles are more commonplace than they were years ago.”
Failing to Develop
According to the World Economic Forum’s recently released Human Capital Report, companies around the globe are failing to develop people’s talents. Efforts to fully realize people’s economic potential – in countries at all stages of economic development – are falling short because of ineffective deployment of skills throughout the workforce, development of future skills and adequate promotion of ongoing learning for those already in employment, said the report. These failures to translate investment in education during the formative years into opportunities for higher quality work during the working lifetime contributes to income inequality by blocking the two pathways to social inclusion, education and work.
HR executives agree with more than half ranking leadership development at their companies as fair to very poor, according to a separate report by Korn Ferry. Survey respondents were largely unhappy with their current leadership development programs; 53 percent of U.S. respondents judged the return on their leadership development spending investment as “fair,” “poor,” or “very poor.”
“This finding is incredible,” said Stu Crandell, senior vice president of the Korn Ferry Institute. “It’s a highly critical commentary on the state of leadership development. If you think you need to get rid of about 50 percent of your approach, it’s tantamount to saying you need to re-think your entire leadership development strategy.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media