Quentin Kowalski· Head of Reward, Calibre Software
Asked in Compensation ·
Our guideline is 8–12% for a one-grade promotion. I work for a pharmaceutical distributor in the US with about 3,400 employees and 15% midpoint progression.
The trouble is where people start from. Someone at 110% compa-ratio in the old grade gets 10% and lands comfortably. Someone at 85% gets the same 10% and lands below the new range minimum, so we top them up, and they still end up 20 points behind peers at the same level.
Is anyone using a target position in the new range, with the percentage being whatever it takes, and how do you keep the cost under control?
1 helpful · 2 insightful · 1 agree · 4 replies · 155 views · 6 following
Accepted answer· by Elif Lindqvist
We use the greater of 8% or the amount needed to reach 90% compa-ratio in the new grade, capped at 20%. Anything that would need more than 20% is paid in two steps, six months apart. Average promotion increase went from 9.6% to 11.4%, so budget for it. The effect on internal equity was worth it. The spread of compa-ratios among newly promoted people narrowed from 30 points to about 12.
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Director of Benefits, Bellwether Consulting
Accepted answer
We use the greater of 8% or the amount needed to reach 90% compa-ratio in the new grade, capped at 20%. Anything that would need more than 20% is paid in two steps, six months apart. Average promotion increase went from 9.6% to 11.4%, so budget for it.
The effect on internal equity was worth it. The spread of compa-ratios among newly promoted people narrowed from 30 points to about 12.
Bianca WalshCEP
Job Architecture Lead, Pinehurst Foods
The low starting position is the underlying fault. If people are being promoted from 85% compa-ratio, either they are being promoted too early or their pay was not managed in the old grade. A promotion rule cannot fully repair that.
Maya ChenWWP
Compensation Manager, Halcyon Financial Group
We tried a target position and found managers timing promotions to suit it. People were held at a low compa-ratio because the promotion would 'sort it out'. If you adopt it, watch for merit increases being held back in the year before promotion.
Head of Reward, Calibre Software
Thanks. Going with greater of 8% or to 90% of the new midpoint, cap at 20%, split if larger. I modelled last year's 212 promotions and the extra cost is about 0.12% of payroll, which finance has accepted.
