Unpaid promotions: big titles without the big bucks
Share Now on:
Unpaid promotions: big titles without the big bucks
After working a few years at a weather technology company, Greg knew it was time for a raise.
He was hired as an IT system administrator in 2015 and had taken on additional duties over time. When a senior system administrator got a new job within the company, Greg was asked to heap his colleague’s former responsibilities on top of his own.
“Then after that, he leaves the company, and some of the other things that he had been doing in his other role get dropped on me,” said Greg, whose last name is being withheld for privacy reasons.
It was a double whammy.
His company did not end up backfilling the role, so Greg had to manage all these duties indefinitely. Naturally, he wanted a promotion.
“I go to my then-boss and I tell him my concern. He’s 100% on my side. He’s like, ‘You’re right, you deserve this promotion,’” Greg said. His boss thought he deserved a better title and at least a 10% pay bump.
But the higher-ups saw the situation differently.
“What was happening is that the company was in the process of attempting to be acquired. And so they were trying to keep their expenses low to look as appealing as possible to possible companies that were going to buy them,” Greg said.
They were willing to give him a promotion, but without the higher pay.
The employer’s strategy can backfire
We’ve become accustomed to rising consumer prices over the past couple of years as inflation reached multidecade highs. Job titles can be inflated too. Some employers offer higher-ranking titles or, at least, titles that sound that way, “without a pay increase or added responsibilities,” as RecruitingDaily.com put it.
A 2023 survey from Pearl Meyer, an executive compensation consulting firm, found that companies are using titles to attract, reward and retain employees more often than before. About 13% of employers used job titles to “recognize and/or reward employees when funds are limited,” up from 8% of employers in Meyer’s 2018 survey.
This can mean they’re assigning higher-ranking titles or designations that are more “creative” and “flashier,” said Rebecca Toman, vice president of the survey business unit at Pearl Meyer.
For example, Toman said some organizations might call employees “data ninjas” or “finance wizards.”
But this could backfire on employers if there isn’t a pay increase to accompany the strategy.
“It shouldn’t be the only strategy that is implemented because at the end of the day, cash usually is still king,” Toman said.
A working paper published this year by the National Bureau of Economic Research found that some companies grant managerial titles, such as “director of first impression,” even if the job is nonmanagerial in nature. By making workers managers and paying them salaries above a certain threshold set by the Fair Labor Standards Act, companies can avoid paying overtime wages, according to the study’s authors, Lauren Cohen, Umit Gurun and N. Bugra Ozel.
The authors say this has allowed employers to avoid $4 billion in overtime payments per year.
Felice Klein, an assistant professor of management at Boise State University, said if you give employees in a competitive field a more impressive title without a pay raise, you increase the possibility that they’ll leave the company. (Engineers, for example, are highly sought after.) They can go on LinkedIn and update their resumes, leading other companies to recruit them and give them the bigger pay to match, she explained.
“You’re essentially making them more marketable,” she said.
Sometimes employees take unpaid promotions because they think these positions will help them develop their skills and demonstrate loyalty to their employer. But most expect they will eventually earn higher pay, Klein said.
Greg ended up turning down his company’s offer for a title bump since it didn’t come with a bigger paycheck. “I was pretty frustrated about that,” he said.
But there was an opening at a nearby company, so he interviewed there and got an offer. That gave him negotiating power with his current employer.
“They gave me the title bump and the pay bump because they could not afford to lose me at that point,” Greg said. Afterward, he officially became senior system administrator and saw his annual salary rise from about $91,000 to $100,000.
What to do if you’re offered a better title without better pay
Workers in this situation, Klein said, should ask for a bigger salary anyway.
“If that is out of the question, then I would say the second thing to do is ask your boss for a timeline of when the pay increase should be expected,” Klein said.
She also recommends suggesting different forms of compensation if you can’t get a higher salary. You could ask for a cash bonus, more vacation time or permission to work remotely.
The final thing she suggests: “Start looking for other jobs with your new job title.”
“If you have this new job title and you’re not feeling confident that your employer is going to pay you for it, then it’s probably worthwhile to see if you can get a job elsewhere,” Klein said. “Because you are going to be more marketable with the higher job title.”
Greg stayed with his company and remained there for a few years after it was acquired. Reflecting on the ordeal, Greg said he wasn’t angry — it was more that he was disappointed.
“I kind of had to force their hand on the issue,” he said.
But on the flip side, the experience helped Greg understand his worth.
“I’ve never been a particularly good negotiator, even though I’m not new in my career,” said Greg, who’s in his 50s. “Because of all that, I researched a bit more about my marketplace value, and it really helped me to understand that there were better options for me.”
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
