senior client partner
Price Cutting at the Bottom of the Pyramid
At the end of April, the pharmaceutical company AstraZeneca surprised the markets by announcing an 11 percent jump in revenue.
Choosing whom to promote and reward can always be a tricky balance any year, but 2021 may be one of the most challenging years yet: there are literally too many people who can make a great case that they deserve a promotion.
An estimated 29 million people put their career advancement on hold last year due to the pandemic disrupting their work, according to a new survey from Bankrate. Many organizations postponed their promotion cycles last year for the same reason. Now, company leaders have to consider all candidates who should have been advanced based on their work in 2020 but weren’t, along with the employees who excelled during 2020. The ramifications of getting this promotion cycle wrong could be enormous, especially with the job market reviving. “It’s a ubiquitous conversation right now,” says John Pike, a senior client partner in Korn Ferry’s Consulting practice. “If there isn’t transparency and fairness, it will lead to more people walking out the door.”
This year will test whether companies are good at not only identifying their top employees but also differentiating the layers at the top. Experts worry organizations may not be prepared. “Profits returned to an all-time high, yet organizations asked employees to delay promotions or bonuses, or take pay cuts last year. Now that bill is due,” says Nathan Blain, Korn Ferry’s global lead for optimizing people costs. Professionals increasingly say they would value promotions over raises if they had to choose between the two. About one-third of employees who get passed over for promotions quickly start looking for new work, according to two surveys Korn Ferry has done on the subject since 2017.
Compounding the issue is the workforce transformation many companies started during the pandemic. Numerous companies evaluated their organizational structures, often streamlining layers of bureaucracy. This flattening may make companies more efficient in the long run, but in the short term, that means fewer management slots for employees who deserve a promotion. “If there are few layers in the organization, employees will spend a longer time at the same level,” Blain says.
That means companies are going to have to come up with different ways to recognize employees. Bonuses, whether spot or long-term, and pay raises are often an option, although more money may not necessarily be enough. Not being able to go to the office to interact with coworkers, taking on unprecedented physical precautions just to be able to work, and other pandemic-era disruptions have made many people reevaluate whether the work that they are doing is meaningful. Employees who are up for promotion and don’t get one may not feel appreciated. “If they don’t have relevancy, then they’ll seek something else out,” says David Vied, global sector leader of Korn Ferry’s Medical Devices and Diagnostics practice.
Experts recommend other incentives if there aren’t enough promotion slots to go around, including allowing employees the ability to keep working remotely or paying for training in new software or skills. Organizations also could consider nontraditional advancement opportunities. Leaders should ask what professional experiences their promotable employees want, then work to secure those opportunities for their employees. Perhaps a marketer wants to take a lateral role in finance, or an engineer wants to work at a manufacturing facility in another country. Those moves may not be direct promotions, but they may be enough to satisfy, particularly for younger employees. “We might have to redefine career growth; maybe it’s not straight upward movement,” says Linda Hyman, Korn Ferry’s executive vice president of global human resources.