It's going to get harder to swing a promotion

livemint.com:

Mumbai: Promotions handed out like candy may be a thing of the past, as companies that rushed to retain and motivate talent at a time of hiring frenzy take a closer look at the practice as attrition falls. Consultants and companies said that fintechs, BFSI firms and startups which had frequently used promotions as a retention tool are finding that it has hurt internal parity and raised employee costs. In the last fiscal year, promotions were used to retain middle and senior level executives with institutional knowledge and client relationships, consulting and audit firm Deloitte said in a report.

According to Prakhar Tripathi, partner at Deloitte, about 81% of the 350 companies included in Deloitte's survey said they will offer promotions as a long-term tool for performance recognition rather than a quick fix. "In FY24’s appraisals, the proportion of employees getting promoted will be lower compared to previous year—this is largely because companies are now transitioning back to conventional wisdom where promotion is a recognition of credible performance and demonstrated potential," Tripathi said. Promotions also raised compensation to a higher pay bracket, creating disparity within similar profiles.

Tech companies would offer promotions to a larger-than-usual proportion of employees during the recruitment spree. But according to some companies, this model was not sustainable. The percentage of employees expected to be promoted decreased from 12.3% in 2023 to 11.5% in 2024, the -Deloitte India Talent Outlook 2024-study found.