What’s Better: A Promotion or a Pay Hike?

When it comes to rewarding employees, which is better, a promotion or an increase in pay? An increase in pay or a promotion is common ways to reward an employee’s effort and performance. Yet, they are two different sets of situations. They both stand at their place and have their own benefits. While promotions move people to the next level it also ensures an increase in salary amongst other benefits. Yet, this is not always the case. A promotion may come without an increase in salary too. A promotion is preferred by most- There are multiple reasons why a promotion is preferred, some of which are as follows:

Reason #1
A promotion is visible to others, while a pay hike is not. Rising in the hierarchy is very important and it earns more respect for the employee from others. In a hierarchical structure, a designation holds a lot of vitality and thus such a visible rise is one of the major reasons for its preference over a pay hike.

Reason #2
A promotion is recognition of an employee’s performance and thus it motivates the employee to do even better. It makes the employee feel like his hard work and commitment is paying off. Hence, it is one of the biggest motivating factors for an employee.

Reason #3
Upon getting promoted, the organization is utilizing the skills and knowledge of the employee more effectively. The employee will realize that his expertise is being recognized and put to use. This sense of achievement may not come with a pay hike as much as it comes with a promotion.

Reason #4
A promotion signals the employee that the organization trusts the employee. It shows the employee that the organization knows that they can handle more roles and responsibilities. This puts forth a sense of belongingness in the employee. Though promotions are preferred by most, an increase in salary is also a beneficial way to reward an employee. A pay hike gestures that you are doing well in your job and that the organization wants to reward you for your contribution. It takes into account the worth of the job as well as the performance. The employee realizes that he has been doing a good job and he has been rewarded for the same. Nevertheless, the motivation from a pay hike is not ever lasting. The high from getting a higher pay dies out faster than that of a promotion. On the other hand, the sense of respect that a promotion brings with it lasts a little longer.