Promoting committed and determined employees is a common practice in organizations. However, the dynamics between promotions and employee retention are far more intricate than commonly believed. A seminal study by the ADP Research Institute offers a nuanced understanding of this relationship. In fact, the findings have far-reaching implications for HR professionals and organizational leaders.
The institute conducted an analysis examining the career paths of over 1.2 million employees across large U.S. companies from 2019 to 2022. The results are eye-opening. Promotions are a powerful motivator, increasing an employee’s loyalty to their current organization. However, they could also unintentionally boost the employee’s confidence in exploring opportunities outside the company. This duality presents a problem: promotions can elevate the risk of an employee leaving within the first month after a promotion.
Why it matters: Promotions are crucial for acknowledging exceptional performance and strengthening employee motivation. However, organizations must brace themselves for the possibility of increased turnover immediately following promotions. This is not just a matter of numbers. It’s a challenge that could affect team morale, productivity, and even the company’s reputation.
- The Role-Specific Impact: Interestingly, the study reveals that the impact is not uniform across all job roles. Employees in positions that require less preparation are more prone to exit the organization post-promotion compared to those in roles that demand more preparation. This suggests that the level of skill required for a role can serve as a moderating factor in the relationship between promotions and retention.
- Retention Impact Varies Over Time: The risk of attrition is most acute immediately following a promotion. However, it tends to wane over time. After six months, the study found no significant difference in retention rates between employees who were and were not promoted. This temporal aspect suggests that organizations may need to focus their retention efforts more seriously in the immediate post-promotion period.
- Employer Preparation is Key: Given these findings, it’s important for employers to proactively develop strategies to reduce the risk of post-promotion turnover. This could involve offering extra training and mentorship programs, creating a more robust onboarding process for newly promoted employees, or even reevaluating the criteria used for promotions in the first place. Employers should also consider implementing ‘stay interviews’ to understand the motivations and concerns of recently promoted employees.
Go Deeper —> The Hidden Truth About Promotions – ADP Research Institute
