Promoted employee shaking manager's hand

Employee promotions are one of the best ways you can recognize and reward employees who go above and beyond in their roles — and help them continue to learn and develop. Promotions usually mean increased pay, responsibilities and/or decision-making power. Many businesses put promotions on hold as they navigated the COVID-19 pandemic, but as businesses continue to recover, promotions are trending the same way. Employees who weathered the storm expect to be rewarded for their dedication, and businesses are eager to fill in the gaps left by the Great Resignation.1 Before you seek outside applicants to fill open positions, consider the benefits of promoting from within instead.

Benefits of employee promotion

There are many benefits to promoting internally as opposed to hiring externally:

  • Improve employee retention: Improve employee retention: Numerous studies show that employees feel more fulfilled when they feel that a company helps them grow and gives them opportunities for advancement.2 Learn more about providing career growth opportunities for your employees.
  • Boost morale: For similar reasons, internal promotions can boost morale and productivity. When employees are rewarded for a job well done, they are more likely to feel happy and competent in their role.2
  • Cost and time savings from the hiring and onboarding process: Internal promotions can bypass the onboarding paperwork and training required of an external hire — plus, they are already immersed in your brand and your business.3
  • Increase employee engagement: All the preceding bullets come together to paint a picture of increased employee engagement. When your employees feel fulfilled at work and know that they will be recognized for their efforts, they are more likely to be engaged with your business’s mission and values.3

There are many benefits that come with promoting your employees, but how do you know who to promote?

How to justify an employee promotion

Past and current employee reviews are a great tool to ensure that a potential promotion aligns with an employee’s performance and goals. Promotions often work in tandem with a review cycle so you can conduct an up-to-date appraisal of the employee’s performance and then reward them with the promotion accordingly. You can prepare employees for future promotion opportunities by tailoring the feedback you offer during these reviews to help them understand what they will need to do to receive a promotion.4

As you look at the employee’s qualifications for a promotion, consider the whole picture of the employee’s time with you, including elements such as:

  • Their ability to do the job and/or holding the necessary certifications
  • Work ethic and commitment to the business
  • Helpfulness and ability to train fellow employees
  • Already volunteering for stretch assignments or taking ownership
  • Willingness to learn

Employees should be promoted when they exhibit both the hard and soft skills necessary to do the job at a higher level. While they will still need time to learn and adjust to their new role, they should be equipped with the skills necessary to thrive.4

Employee promotion process

The employee promotion process may look different across businesses of varying sizes and structures, but the main elements are similar across the board. Follow these steps to begin promoting employees in your business.

1. Assess your staff’s potential

Many of your employees may be great, but that doesn’t mean that all of them are ready to be promoted — or that your business structure allows for it. First, make sure that a promotion makes sense within the employee’s team and the overall function of the business. Ask yourself: Will this promotion positively impact the productivity of the team? Is a promotion going to add a necessary layer of leadership?3

Lean on your performance reviews of individuals and teams to identify good opportunities for promotions, whether to recognize an individual or to fill a need in the team.4

2. Consider different promotion methods

Promotions can take several different forms depending on what fits your business’s needs. A few of the most common promotion strategies include:

  • Horizontal promotions: Provides a pay increase without an increase in responsibilities. This is a good way to reward employees without changing their job function.
  • Vertical promotions: An upward change that includes a shift in responsibilities, increased pay, and other benefits. Vertical promotions are ideal for employees who are ready for new challenges and responsibilities.
  • Dry promotions: Dry promotions are increased duties without awarding more pay. This type of promotion is ill-advised in most cases.

In addition, you can hold either closed or open promotions. In an open promotion scenario, you may choose to open the potential of promotion to all employees. This can be a good idea for businesses that are very horizontal in structure. On the other hand, closed promotions are when you specifically choose a certain team member for the promotion.2

3. Define requirements for internal promotions

Having defined requirements for internal promotions can help you ensure that you are rewarding the right people at the right time in an equitable way. Your requirements could be hard milestones such as seniority or measurable performance metrics, or they could be based around employee potential and willingness. However you choose to do it, defined requirements will help you and your employees stay on the same page about your expectations for promotions and how they can get there.5

4. Notify employees of internal promotion opportunities

To ensure a good pipeline of internal applicants for promotion opportunities, be sure to communicate the opportunity within your business. If your business has an internal job board, post the position and its requirements there. You can also use internal communication tools such as email or other messaging applications to communicate about the opportunity directly. You may even reach out directly to employees you believe to be good fits.4

5. Evaluate candidates for promotion

Once you have established an internal applicant pool for the promotion, it’s time to evaluate each candidate against your requirements for the role. The ideal candidate is one who already fulfills many of your requirements. However, since a promotion typically involves expanded duties, it is also natural that many applicants will have opportunities to grow in certain areas.

In addition to meeting most of the skills and qualifications for the role, you should also look for applicants who embody the business’s mission and values. When you promote someone, they become a leader in their area, and their actions trickle down to those around them. Choosing someone who others can easily respect and will want to emulate is important to the overall success of your business as well as their success in the role.6

Promoting employees for your business’s success

Internally promoting employees is a great way to strengthen your team and reward excellent employees for going above and beyond in their jobs. It can aid in employee retention, increase employee motivation and morale, and decrease your time and money spent training new employees. Learn more about strategies for your small business, including how to hire qualified applicants, in the Nationwide business solutions center.

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[1] “Promotions Got a Boost in 2021” Roy Maurer, (Accessed June 2023)
[2] “Employee Promotions: The Types, Benefits, & Whom to Promote” (Accessed June 2023)
[3] “4 reasons to promote an employee into a new role” Allaya Cooks-Campbell, (Accessed June 2023)
[4] “How to Promote Employees (With Tips)” Indeed Editorial Team, (Accessed June 2023)
[5] “Employee promotion: what you need to consider” Brendan McConnell, (Accessed June 2023)
[6] “How to Prepare for a Promotion Interview With 7 Tips” Indeed Editorial Team, (Accessed June 2023)

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations and to make their own decisions about how to operate their business. Nationwide Mutual Insurance Company, its affiliates and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided.