Dear employees: Sorry, but promotion does not guarantee bigger pay cheque

Only 17% of Singapore firms raise salaries after promotion.

A promotion does not automatically mean a salary increase, finds a new survey.

Independent research by specialised recruitment company Robert Half indicates only 17 per cent of Singaporean companies always provide a pay rise following a promotion.

It also found that medium-sized companies (21 per cent) are more inclined to always give pay rises with a promotion compared to large companies (15 per cent) and small companies (15 per cent).

Matthieu Imbert-Bouchard, Managing Director Robert Half Singapore said: “Promoting without a pay rise is far more common in Singapore than people might think. While receiving a promotion is a clear sign of confidence in an employee, taking on a more senior role and more responsibilities without getting a salary increase can negatively impact an employee’s motivation which in turn can influence their decision to change jobs.”

Imbert-Bouchard added that with Singapore’s tight labour market and low unemployment rate, and in order to hold on to their top performers, employers need to reward their best employees by giving them career advancement opportunities.

However, he noted that pay rises are a very effective retention tool as many employees are prepared to work hard knowing the reward will be a promotion with a better salary and bonus.

“When employees don’t receive a salary increase when promoted, it is vital to explain the reason, as well as potential targets that the employee needs to reach within a certain timeframe in order to receive a salary rise," he said.

According to the study, more than four in 10 (43 per cent) finance leaders say the primary reason for promoting without attributing a corresponding salary increase is because they want to assess an employee’s performance first before remuneration is increased.

Little over one in five (22 per cent) refer to the business lacking the financial resources to increase salaries, followed by 11 per cent who say the role had to be filled urgently.

Mr Imbert-Bouchard concluded: “Employees who receive a promotion without a corresponding salary increase should consider negotiating non-financial benefits. It is important for employees to remember though that the challenge of taking on a more senior role and additional responsibilities can result in more career advancement in the future, which eventually may make up for the lack of financial rewards.”