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Compensation & Rewards

Our guide to a comprehensive promotion policy

Leapsome Team
Our guide to a comprehensive promotion policy
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The potential for more promotion opportunities at your growing company should be something to celebrate — not a reason for managers to be sent into a tailspin and make ill-considered promotion decisions without adequate time to think. But that’s the risk you run when your organization doesn’t have a comprehensive promotion policy.

You probably know the advantages of promoting from within*: less investment in employee training, increased motivation and engagement, and the bonus of working with an employee who already understands your company culture and values. And for that, you need a fair, transparent employee promotion policy that encourages retention and employee growth within your organization.

And that’s what we’ll break down for you in this post. We’ll explain what a promotion policy is, why it’s beneficial to have one (and detrimental not to), and the essential elements you should include in yours.

*Forbes, 2022

What is an employee promotion policy?

An employee promotion policy is a formalized set of standards that a company can use to offer employees opportunities for advancement. This policy can be as high-level or as detailed as an organization desires, but it’s essential to consider how it’ll apply to your company as a whole — a policy that’s too granular may be too rigid to apply to all situations. 

An employee promotion policy should include:

  • A policy statement outlining the purpose of your policy
  • Who the policy benefits (e.g., internal candidates)
  • How your company defines promotions (e.g., an upward movement in position, responsibility, and salary)
  • Your organization’s requirements for considering a promotion
  • The circumstances under which managers may consider promoting employees
  • The process that must be followed for promotions

Why having a promotion policy is beneficial

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A promotion policy helps you scale your promotion processes and create a more transparent work environment

On a practical level, a promotion policy helps you create a scalable process for your company’s growth. And it can also have a powerful impact on your ability to create an engaging, psychologically safe environment for your employees while bolstering your organization’s reputation within your industry. Here’s how:

Avoid biases & have objective criteria for promotion 

Your company should aim to help bridge opportunity gaps for women and underrepresented groups. It sometimes happens, for instance, that a manager finds themselves in a situation where they could promote an employee they have a bond with, and they may worry there’s a conflict of interest at play.

While it takes more than a promotion policy to combat the insidious menace that is unconscious bias, making objective decisions is much easier when you have a detailed list of criteria for promoting employees — and concrete parameters to guide managers.

A strong promotion policy is flexible, takes competency factors (like soft skills and performance review feedback) into account, and isn’t based solely on seniority or professional background.

⭐ It’s easier for employees to envision their career journey within your organization when you’ve created a career path framework

This framework should define roles and responsibilities for every role at your company and give employees an overview of the skills needed for a promotion at every level.

Standardize your promotion process

Once you’ve established a promotion policy and trained your managers on how to apply it, they’ll have a framework to follow when they feel ready to promote qualified internal candidates. Promotion policies are particularly effective because they don’t leave room for guesswork or ad hoc processes.

Reduce turnover & increase retention while helping employees understand their growth possibilities

When employees have a framework for their development, it helps allay any fears that they’ll spend their first few years at your company in a holding pattern. Even when it’s not time for a promotion yet, managers can use promotion policies in employee mentoring sessions to explain what criteria they need to meet to qualify for a promotion.

Create a positive brand image as a great & transparent employer — this will help with recruitment & market positioning

A promotion policy shows employees you’re committed to putting people first, especially if you state it explicitly. Consider how the effort you put into the finer details of your policy — like ensuring it aligns with your DEI initiatives and that managers know how to communicate it to your people — positively impacts employee engagement surveys and your employee NPS (Net Promoter Score).

Help management make difficult promotion decisions 

Promotion decisions can be hard for managers who want to be honest and fair, and seeking insights from colleagues or peers can only go so far. One of the main goals behind your promotion policy should be providing clear guidance for leadership on tricky personnel decisions, and you should be clear about what criteria for promotion look like (and don’t look like) for your company. For example:

  • Quality, objective criteria for promotion: High performance in the last three review cycles, clear motivation, and peer or managerial recommendations
  • Subjective criteria for promotion: The person is well-liked by the leadership team

Can help you stay compliant with labor/workplace regulations 

Ensuring your promotion process is fair isn’t just good business ethics: it can also help you comply with anti-discrimination laws and avoid litigation around unfair promotion practices.

According to EEOC (US Equal Employment Opportunity Commission) regulations, everyone eligible for a promotion based on performance and experience should be given a fair shake — regardless of race, age, national origin, disability, or religious affiliation.

And while this seems intuitive enough, the fact that women and people from underrepresented groups feel they have to work twice as hard as their white and cisgender men counterparts should speak to the fact it isn’t.

🚀 Take control of your promotion policy with Leapsome

Leapsome’s promotion tools help automate your career development workflows and grow your business.

Learn more

The risks of having no promotion policy in place

Yes, creating an effective promotion policy takes time for review and fine-tuning — and talking about career advancement, while worthwhile, can be emotionally charged for some. But let’s look at some of the potential dangers that await if your organization doesn’t have a promotion policy in place:

Upholding biases & disadvantaging employees from underrepresented groups

Companies that meet their DEI hiring initiatives may pat themselves on the back. However, without a formalized promotion policy, you’re still at risk of upholding the structural barriers for underrepresented groups in the professional world and inhibiting their career growth.

A promotion policy — when executed properly on an organizational level — helps managers consistently keep potential biases top of mind. This way, when factors align, you can open the space to offer growth opportunities to employees from diverse backgrounds.

Lack of guidelines leading to different managers & departments handling promotions differently

Different teams may have different needs, but leaving promotions decisions entirely up to managers and department heads increases the likelihood of making emotional, “gut-driven” decisions informed by personal preferences — which can lead to poor fit. 

Employee disengagement due to the feeling that promotions are arbitrary or inaccessible

Without a written set of guidelines communicating what’s needed for employee promotions, your people will be left to guess and hope they’re doing everything in their power to be considered for advancement.

But here’s the thing: Employees are losing patience with the lack of clarity and transparency around development, leading to a rise in disengagement and “quiet quitting” at best (and high turnover at worst).

5 essential features of a promotion policy

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A great promotion policy starts with a policy statement outlining its purpose

While your company’s promotion policy should be individualized to fit your specific needs and objectives, here are five key features worth considering.

1. Policy statement

At the start of your document, provide a brief statement describing why you developed your promotion policy. 

For example, you might explain that your policy covers guidelines managers must follow when the timing is right and circumstances align with those in your policy. You can also describe how your policy works with your mission to support employee development and reward performance, regardless of background or seniority.

2. Career development vs. promotion

It’s a good idea to define how your promotion policy is separate from conversations about performance management and compensation.

For instance, you might clarify that, while managers may offer wage increases to employees who receive good results in their performance reviews, a promotion is distinct in that it often comes with an increase in responsibility and change in title.

3. Circumstances required for promotion

While promotions often occur when a new position opens up, that’s not the only time they can happen. And, based on the events surrounding a promotion, the timeline can vary widely, too. For example, managers can offer a promotion when an employee expresses interest in development or shows growth potential, or when someone acquires a new credential or degree, like an MBA. 

In your policy, you could list some common circumstances where promotions happen, including:

  • An unexpected job opening after an employee leaves
  • The opportunity to hire additional department team members
  • Hiring managers are advertising an open job internally
  • An employee consistently has good evaluations or shows consistent improvement
  • An employee demonstrates interest in career advancement
  • An employee attains a new degree or credential
  • An internal mobility opportunity for lateral or diagonal advancement opens
  • An employee has demonstrated mastery in a specific skill

4. Communication

We’ve discussed how important transparency is in the realm of employee promotions; in this section of your policy, you can explain how you’ll communicate your promotion policy throughout your organization. This process might include:

  • HR/People Ops departments discuss and review the policy yearly with department heads and update it as needed
  • Managers will review the policy with their direct supervisors and familiarize themselves with it
  • HR departments and managers can share the most up-to-date version of the policy at the company-wide and team levels via email or another company comms tool

5. Promotion process & employee training

If you want your employee promotion policy to be a promotion manual for managers, you’ll also want to provide step-by-step instructions.

Screenshot of Leapsome's development frameworks
A platform like Leapsome lets you create detailed skills frameworks for every level of your organization

Here’s a possible set of steps you can outline in your promotion and employee training process:

  1. Arrange a 1:1 meeting with your employee to discuss their career goals and aspirations. This is an opportune time to determine if they have vertical growth goals (i.e., they want to move up to a managerial position) or want to become more skilled and specialized as individual contributors. If your company doesn’t currently have flexibility for employees with goals other than managing people, you may need to work with your report and cross-functional leadership to create more options that move in directions aside from “up.” 
  1. Determine what opportunities are (or will be) available when the employee is ready for promotion. This may mean that you need to create a position or adjust the employee’s job title to reflect their added responsibilities.
  1. Walk employees through your career progression framework to illustrate what competencies someone must develop to move on to the next level. Also, decide on a reasonable time frame for gaining experience with those competencies.
  1. Discuss the possible promotion path with the employee’s direct supervisor or department head to get approval and guidance. In addition, discuss it with their HR or People Ops director to see if any adjustments to discuss compensation options are needed. 
  1. Inform candidates about the promotion opportunity on the table and get their input and feedback. Your company’s career progression framework may outline what skills people need to develop to be promoted, but this is also a good time to get specific and identify challenges individuals are facing or skills they might need to work on.
  1. Decide on a training timeline and the approach the employee needs to follow to be ready for their new role. For people-first organizations, it’s important to remind your employees that your timeline doesn’t represent a strict deadline. A rough estimate is helpful, but everyone learns at their own pace — so keep schedules tentative and flexible. 

How software can simplify the promotion process 

A promotion policy helps you create a scalable process for company growth, and it can play a crucial role in creating an engaging workplace and enhancing your company’s image.

With Leapsome’s new promotion management tool, you can create sustainable processes and workflows for employee growth.

As always, we designed these features to interact seamlessly with performance reviews, skills framework, and compensation management (to list some of our features) — so that you can make holistic, data-backed decisions around employee advancement.

🚀 Leapsome lets you streamline your promotion policy

Automate career development workflows and take your business to the next level with Leapsome’s promotion tools.

Book a call with one of our experts

Written By

Leapsome Team

Written by the team at Leapsome — the all-in-one people enablement platform for driving employee engagement, performance, and learning.
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