Isn’t it kind of hard to believe that getting a promotion where you work can be detrimental to your overall income? How is that even possible? I’m sure you’re thinking that if I get a promotion that includes a raise, how is that detrimental to my income? Well, I’m not saying it happens a lot but under the right circumstances, it definitely happens without you even knowing about it. How do I know? Because it happened to me. Secondly, I had to do it to someone as instructed by the Finance department.
Internal Promotions do Have Negative Effects
Earlier in my career, I was promoted several times within a company. I was a tester of equipment when I first got hired. Then I got promoted to a Group Leader position, which had a wage structure mutually agreed upon by both the union and company. I became very interested in becoming a manufacturing engineer when I
was a GroupLeader. Unfortunately, there weren’t any engineering openings. However, an Industrial Engineer became available. The Manager of Manufacturing Engineers was responsible for both the Industrial and Manufacturing Engineers. So, I applied for the position. I was awarded the position. At the time of the promotion I thought I received a good raise. While in this position, I assisted the Manufacturing Engineers with I had any free time. Eventually, I was promoted to Manufacturing Engineer with another raise.
I was offered a position in the relocation when the company was relocating to Florida. I accepted the position but didn’t have to relocate for several months. However, I was reluctant to relocate for several reasons. Therefore, I applied for several jobs. Another company offered me the Production Manager position, which included a significant raise. I took the new job and informed my existing employer accordingly. Of course, the manager asked why. I gave several reasons with the salary being one of them. In our discussions, he indicated I should have been making more money as a Manufacturing Engineer. That really blew my mind. Especially, since he was the one that gave me the increases from Group Leader to Industrial Engineer to Manufacturing Engineer. So, he could have given me each time but decided not too. Yet, I felt good each time I got a raise.
How The Internal Promotion Work
Here is another situation when I was responsible for giving the raise. I promoted a person from being project management to the supervisor of the department. If I had to hire from the outside, the starting salary would have been $50K, which would be in the upper middle of the pay range for that position. However, this person was only making $25K.That would be a 100% raise. Well, that didn’t go over too well with finance. She received a 40% increase, which took her salary to $35K. This salary met the low side of the pay range for that position. She was very happy with the salary increase. So was the company. They saved $15K by not hiring from the outside. She literally lost $15k when you compared her raise to someone being hired from the outside.
In both situations, it shows that internal promotions based on your current salary could lower the value of your raises when compared to hiring a person from outside the company. I’m not sure how often this happens but I’m sure it happens more often than we think. Unfortunately, sometimes it’s just better to change companies to get the best salary increase.