1. Ahmad U3072227
Ario Ardianto Baroto U3088020
Naina Dhingra U3080090
Tsering Choden U3105935
Ugyen Dorji U3103499

2. Presentation Outline
 Case introduction
 Theories related to the case
 Application of the theories to the case
 Recommended solutions
 Conclusion

3. Promoting without giving raises
• Promote from hourly job position to supervisory or
management level
• Employment status, classification change and pay?
Reasons:
• Boost morale and retain key employees
• Cutting costs in difficult economic times
Problems:
• Causing resentment and confusion
• Morale problems and retention issues

4. Theories related to the case
 Promotion usually include pay increases
 There is a strong support in the literature which
indicates that promotions are positively correlated
with wage increases (Gibbons & Waldman, 1999)
 Distributive Justice theory claims, employees perceive
that rewards are distributed in relation to
contributions.

5. Theories related to the case
 Equity Theory: Employees evaluate and compare their
inputs/outcomes ratio to others inside the same
organisation or in another organisation to determine
fairness.
• If employees perceive themselves as either
undercompensated or overcompensated, this will create
tension and will drive them to respond to this
situation to reduce the tension and restore equity
(Adams, 1963).

6. Application of the theories
 Companies that promote employees without pay are more likely to
lose their top performers (76%).
 Around 40% of HR senior executives recognize that salary and
bonuses are the main reason employees leave their company
(www.workplaceinfo.com.au, 2012).
 Increased responsibilities are precious opportunity for employees to
learn more, develop and grow.
 Some managers respond well to the employees who are
willing to take more responsibility for no extra pay
and might be recorded as part of an individual’s career
path development.

7. Application of the theories
 Sometimes some companies exploit those staffs who agree
to take on more work which might be more working hours
or more responsibilities.
 Consider distributive justice principle
 Rewards must be distributed related to contribution
 Manage equity & fairness perception
 Higher responsibility should be fairly compensated
 May not always be monetary incentives
 Be consistent, avoid discriminatory reasons

8. Recommended solutions
 Transparency in terms of communication
Downfall in overall industry
Specific issues: losing a contract, unpaid bills
 Recognize the value of employees
e.g : Revise mission statement to include all
employees
 Put a time frame on the freeze and
revisit the issue in the future

9. Recommended solutions
 Good Values and strong Ethics of the company
Equal treatment, Top management concerned for
employees and healthy working environment
 Other form of benefits :
Increased vacation time
More flexible time schedule
Training for professional development
Working from home once a week

10. Conclusion
 Organisations that are promoting their employees without
increasing pay are faced with potential problems, such as morale
and retention issues.
 Increased responsibilities are precious opportunity for employees to
learn more, develop and grow, and might be considered in their
career path development in the future.
 Organisations must follow distributive justice principle, manage
perception of equity and fairness, and recognize
the importance of participation and
communication.

11. Conclusion
 Clear and transparent communication from management to the
employees is very essential in order to have positive outcome. Informal
meetings and involvement of influential people from the employee group
will be very helful.
 Our recommendations :
Communicate clearly, put a time frame to reevaluate the freeze,
recognize employees’ values, good values and strong company ethics, and
provide other forms of compensation for the
promotion.

12. Discussion questions
 Would you accept a promotion without a
pay increase? Why?
 What are the risks of promoting employees
without increasing their pay?
 What can organisations do to overcome
those risks?