Employee promotion best practices (+ free template & checklist!)

Handling internal promotions can seem tricky when you’re trying to increase employee retention, identify top talent, and do it all fairly. But these processes don’t need to be so complicated; clear promotion policies can get you there while ensuring transparency and improving team member satisfaction. 

After all, the way organizations manage internal employee promotions significantly impacts the overall health of the work environment. Multiple studies have found that a lack of potential career advancement is a key contributor to turnover. 

Indeed, a 2022 McKinsey study (1) reported that a lack of career advancement and development was the most common reason participants quit a job, while 63% of respondents of a Pew Research survey (2) cited a lack of advancement opportunities as a reason for leaving. Employee churn isn’t only disruptive to team cohesion and productivity, but it’s also expensive for businesses to undertake hiring processes over and over again. So, creating a solid internal promotions policy is essential. 

To help your team navigate this process, we’ve put together a list of best practices to help your company create effective and transparent promotion policies that HR managers and employees will love.

🔥 A solid internal promotion policy makes for a happy, high-performing team

With our free, customizable template, you won’t miss a beat when developing your internal promotion policy.

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1. McKinsey, 2022‍
2. Pew Research, 2021

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Preparing for promotion conversations: a checklist

When potential employee promotions are on the horizon, human resources teams should prepare supervising managers for promotion-centered conversations.

Many managers may not have experience or training in discussing career growth with employees (especially if they’re relatively new to management roles). However, managers should be able to handle these conversations, providing their reports with development feedback — including areas for improvement, recommended training, and experience they need to gain to achieve a promotion.

Here’s a checklist to help HR teams prepare hiring managers for internal promotion conversations:

• Check the organization’s compensation management materials to define the role’s title and pay range

• Specify the tasks and responsibilities the position will involve

• Determine the experience, skills, education, and/or certification that would qualify someone for the promotion

• Review interested employees’ performance data, competencies, and skill sets to identify where they excel — and where they need more support

• Be prepared for pushback, including negotiations regarding potential pay or disagreements if the employee feels overlooked for a potential opportunity

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Best practices for fair, effective employee promotions

Your promotion practices should help you create employee opportunities and nurture a culture of transparency and fairness. Doing so intentionally is key; here are some of our best-practice recommendations.
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Consider personal & professional growth

Sometimes, managers assume their direct reports have the same goals they once had. But if you’re an effective manager who understands the promotion process looks different for everyone, you know how crucial it is to coach your team along the right career path for them.

And how do you know what development opportunities are best suited to your employees? Ask them! Arrange 1:1 meetings with your reports to discuss their:

• Professional goals for the next two or three years
• Long-term career goals
• Working style
• Ideal work routine
• Professional support needs

Some employees are more interested in promotions that would allow them to develop new skills, for example, instead of traditional upward mobility, which may have more demanding schedules. IC (individual contributor) growth can be just as exciting of a route forward as being a people manager! 

“Promoting an employee is one of the most important functions of people management. This way, we supply senior positions with internal talent and provide growth prospects for employees.”

— Ricardo Luís Von Groll, Manager at Talentify.io

Base compensation decisions on skills & performance, not tenure

As job hopping and industry hopping become more prevalent for the millennial and Gen Z workforce, the notion of seniority has changed significantly. While you don’t have to remove tenure as one of your promotion criteria entirely, you should be cautious of a seniority-only system; it’s better to balance seniority and performance-based promotions, so junior employees also know the company will appreciate their hard work. With this strategy, you’ll find it easier to retain your newer talent. 

Implementing career development frameworks is a great way to guide performance-based promotion decisions; this documentation outlines a level-by-level progression plan with the skills employees need to move from one stage to another.

Leapsome’s Competency Frameworks help define the skills needed at each level, providing clear visuals and requirements for career advancement. They also empower managers to support their reports’ growth more effectively, as they know exactly where to focus their guidance for the biggest impact.

“In the old way of doing things, employees were rewarded for their loyalty — essentially, how long they stayed. But these days, people are staying for shorter periods at companies, and promotions shouldn’t be given simply because someone has spent years and years somewhere.”

‍— Matas Jakutis, CMO of ForceField Digital

Provide opportunities for cross-department exposure

When discussing promotions with employees, it’s important to consider the broader context of internal mobility. While promotions are often vertical, like moving into a higher position, internal mobility includes lateral moves and other career development opportunities within the organization.

In a company that supports internal mobility, someone could make a lateral move to another area or leave a manager track, choosing to become more specialized as an individual contributor.

Managers might worry about losing top talent, but that shouldn’t stop them from connecting their teams with leaders from other departments. Doing so helps employees see how their work impacts the organization and can increase their sense of value — which may help the company retain skilled employees and preserve essential knowledge.

And yes, these efforts might lead employees to explore different roles or specialties, but supporting their growth is better than keeping dissatisfied employees and creating silos between departments.
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Make promotions a discussion rather than a top-down decision

Managers who know how to give feedback understand that promoting employees should involve discussions about their vision for their new role and how it aligns with company goals, even when making favorable promotion decisions.

That’s why a clear promotion policy is essential — it outlines how managers should handle promotions, step by step. In your policy, you can specify that managers should begin with a discussion and follow up with ongoing training. 

Ideally, career development talks should happen before promotion opportunities arise and can be integrated into employee reviews and ongoing feedback. Managers should also have open, honest conversations with employees who weren’t selected for a promotion, helping them understand why and how they can improve.

In these conversations, ask questions like:

• [x] are some reasons why we went with a different candidate. But why do you believe you should have been chosen?
• How do your values align with our company’s values, and where do you think you need to improve?
• [x] is what I think you can do to boost your performance. What are your thoughts?
• What training opportunities would you like more access to?

For example, if you have a team member with strong technical skills but limited leadership experience, explain that they should first take the lead on individual projects. Then, give them opportunities to manage projects that match their strengths. Managers could also support professional development through formal programs or self-directed training.

⭐ How does career advancement tie into your company’s compensation? Check out our guide to compensation planning, where we walk you through building a plan for your company.

Be transparent about how promotion decisions are made & when they happen

Transparency is key to a healthy company culture, especially as more organizations shift to remote work. Employees don’t want to feel left out, and being open about how management makes promotion decisions is a great way to build trust. This means sharing the process behind choosing internal candidates and making hiring decisions. 

For example, no one should be surprised when you make a promotion announcement for a new head of development. Keep everyone in the loop as you go by responding to questions like:

• Are you considering a few different candidates?
• How can interested employees apply?
• Are you only considering internal applicants?
• What data will guide your final decision?
• Have you already chosen someone for the role and plan to train them for a few months?
• How will you manage succession planning?
• When will you announce the promotion?
• Who will fill the promoted employee’s previous role? 

Employees want to know their input matters and that you’re not hiding anything out of fear of their reactions.

“One important change we’ve made to our promotion practice is prioritizing transparency as much as possible. Whenever a new opportunity for promotion arises, management communicates all relevant details to the entire team rather than only those who are realistically in the running; this creates a lot of benefits in many areas of our working culture, but primarily, we find it a good motivating force for all of our staff to know when and how often promotions are happening.” 

‍— Anthony Martin, Founder and CEO of Choice Mutual

Promotion policies in practice: Leapsome’s real policy example

At Leapsome, we understand that transparent and fair promotion policies are crucial for cultivating an engaged workforce. 

Our performance review process guides development plans and informs decisions about promotions, merit increases, and bonuses. This approach ensures that every decision is rooted in a comprehensive understanding of performance and potential, underscoring our commitment to employee growth and a positive work environment.
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Introduction of the 9-Grid system

To enhance our decision-making process, we’ve implemented the 9-Grid system, an industry-standard instrument for evaluating performance and potential.

The 9-Grid scores, now a core component of our performance assessments, are visible to employees, providing transparency and fostering constructive discussions with managers. 

Complemented by self-reflective questions, these scores serve as a foundation for meaningful conversations about career progression and development. While we encourage proactive career ownership, we also provide robust support to guide employees on their journey. 

During promotion, merit increase, and spot bonus discussions, placement within the 9-Grid is a key determinant. Employees identified as Stars, High Potentials, High Performers, Core Talent and (in some instances) Solid Performers are considered for advancement. 

However, placement in the 9-Grid is not the only factor in promotion decisions. Additional considerations include:

• Readiness for the next level — consistently high performance at the current level is a strong indicator of advancement potential
  
  
• Tenure at the current level — while not a strict requirement, we often establish a minimum duration before considering an employee for promotion
  
  
• Business need for the role/level — a promotion, especially to a managerial role, depends on the organization’s need for additional capacity in that area
  
  
• Organizational design and team structure — decisions also factor in the overall team setup and how roles align with strategic objectives

Promotion, merit, and bonus proposals are approved or declined collectively by the Founders and Senior Leadership Team, facilitated by People Partners. This collective decision-making ensures a balanced and centralized approach to career advancement and financial outcomes. 
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Assessing employee potential

Evaluating potential is a nuanced process, and at Leapsome, we have developed a clear framework to guide this assessment, inspired by ghSMART’s model. We focus on three psychometric quotients:

• Cognitive Quotient (CQ): This metric evaluates solution orientation, the ability to see the bigger picture, innovative thinking, critical analysis, and logical reasoning. We observe CQ through cognitive tasks, complex situations, and cross-functional interactions.
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• Drive Quotient (DQ): DQ measures grit, intrinsic motivation, resilience, and the capacity to inspire and uplift others. It is best observed in challenging tasks, responses to setbacks, and interactions within teams.
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• Emotional Quotient (EQ): EQ assesses empathy, self-awareness, and people orientation. We evaluate it through team interactions, adherence to company values, and the ability to gauge and respond to the emotional dynamics within a group.

To achieve a top score in potential, individuals must consistently demonstrate excellence across all three quotients. We believe that potential is a bit more stable than performance and doesn’t fluctuate that much. However, it can be developed through targeted feedback and development initiatives.
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Assessing employee performance

Performance assessment at Leapsome is grounded in the specific requirements of the current role, including level, targets, and deliverables. We use a 3-point performance scale, carefully calibrated within each department before every performance management cycle to ensure alignment with our organizational goals and the current business context.
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Supporting growth with our Performance & Development Framework (PDF)

Our Performance & Development Framework (PDF) is designed to unlock individual growth by offering a clear and actionable development path for each employee. This dynamic process evaluates performance and contributions and provides a roadmap for future growth, ensuring that every employee has the opportunity to align their personal goals with the company’s broader objectives.
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Leapsome’s free promotion policy template

Leapsome’s free promotion policy template will help you define how your organization supports career growth while ensuring fairness and transparency.

Our template includes promotion processes, criteria, and considerations for hiring or promoting employees; everything can be customized to suit your company’s unique needs and practices.

‍ 🙌 Ready to create your company’s promotion policy?

Create a transparent promotion policy that’ll keep employees and hiring managers on the same page.

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Take your promotion practices to the next level with Leapsome

How you manage your promotion process directly impacts how employees feel about your company, making it essential to handle promotion policies with care. By establishing best practices for promotions, you’ll set the foundation for sustainable growth and reduce attrition in the long term. Plus, by implementing our specialized tools to guide your promotion strategy, you’ll likely see a boost in employee engagement and retention. 

Our Competency Frameworks empower both managers and reports; employees can easily see the skills and competencies they need to develop to move forward, and managers can pinpoint the areas where they should focus their support and guidance. 

In addition, Leapsome Compensation can help you make data-informed decisions based on performance data and industry benchmarks. For example, you can ensure that you’re not exclusively promoting men or overlooking highly skilled employees in favor of those with more tenure. 

At Leapsome, we aim to help you make consistent, unbiased, and data-backed promotion decisions. Our people enablement tools for performance reviews, competency frameworks, and compensation are all well-integrated and AI-optimized, making your promotion procedures easier to scale.

🚀 Make promotions fair and transparent with Leapsome

Leapsome’s people enablement tools help you make more data-informed decisions and streamline the entire promotions process from end to end.

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