The “Dry Promotion” Phenomenon in Human Resource Management

In today’s organizational environment, where strong emphasis is placed on efficiency, cost optimization, and the maintenance of short term financial performance, the so called “dry promotion” phenomenon is becoming increasingly visible. This term describes a situation in which an employee is granted a higher job title, expanded responsibilities, and elevated performance expectations, yet receives no salary increase or other tangible financial benefits.

Such practice is often presented as a career growth opportunity, recognition of achievements, or a temporary solution driven by budget constraints. In reality, it represents a promotion in title only, where the employee’s economic situation remains unchanged despite their increased contribution to organizational performance.

Although the phenomenon itself is not new, similar practices were observed during the 2008 to 2009 financial crisis, when approximately 35 percent of organizations admitted awarding titles without corresponding pay increases. In recent years, however, it has regained momentum. The trend is particularly evident among mid sized companies and in sectors with limited financial resources.

Data from 2023 indicate that as many as 40 percent of mid sized companies with annual revenues between 300 million and 1 billion US dollars reported actively using promotions without financial compensation as a retention strategy. In comparison, in 2018 only about 14 percent of organizations declared using such practices. This growth suggests that dry promotion is no longer an isolated occurrence but is increasingly becoming a systemic element of HR strategy.

The Essence of the Phenomenon and the Breach of the Psychological Contract

In the context of human resource management, the core issue of dry promotion lies not merely in the absence of financial reward, but in the violation of the psychological contract. When employees assume greater responsibility, they typically expect proportional compensation or at least a clear perspective that their increased contribution will be rewarded in the future.

The psychological contract, understood as an unwritten agreement between employee and employer, is grounded in principles of mutual fairness and proportionality. When an organization demands more while offering no equivalent return, trust gradually erodes.

Although in some cases a dry promotion is presented as a temporary arrangement, employees frequently face uncertainty because there is no clearly defined timeline or conditions under which compensation will be reviewed. Research shows that 62 percent of employees who accepted expanded responsibilities without a salary increase reported receiving no specific timeframe or written commitment regarding future compensation review. This significantly intensifies feelings of unfairness and perceived manipulation.

Causes and Organizational Logic

Organizations that implement dry promotion practices most commonly justify them with financial arguments and the need for cost control, especially during periods of economic uncertainty when increasing payroll budgets is perceived as a long term risk. In this context, a new title becomes a low cost form of recognition that allows organizations to formally acknowledge employee contributions without committing to additional expenses.

Moreover, approximately 37 percent of organizations admit using title promotions as a strategy to retain key employees, assuming that enhanced internal status will reduce their intention to seek opportunities elsewhere. However, this logic often proves short sighted, as a higher job title increases an employee’s attractiveness in the external labor market and facilitates transition to better paid roles in other organizations.

Consequences for Employees: Motivation, Burnout, and Turnover

At the employee level, a dry promotion typically produces a short term positive emotional effect, which is soon replaced by disappointment arising from the mismatch between increased expectations and unchanged compensation. Studies show that engagement levels among employees promoted without a salary increase decline by an average of 12 to 18 percent within the first six months. At the same time, burnout risk increases by nearly one third, particularly when previous workloads are not reduced.

These consequences are directly reflected in turnover rates. According to ADP data, as many as 29 percent of promoted employees leave the organization within the first month after promotion, compared to approximately 18 percent among non promoted employees. This suggests that the promotion itself, if not accompanied by tangible benefits, may act as a catalyst for departure rather than as a tool for strengthening loyalty.

Generational differences are particularly notable. Recent data indicate that over the past year, around 33 percent of Generation Z employees experienced dry promotions, compared to 18 percent of Millennials and only 7 percent of Generation X employees. This suggests that younger employees are more likely to encounter this practice but are also less willing to tolerate it and more inclined to respond by leaving the organization.

Organizational Consequences and Long Term Costs

While dry promotion may reduce direct payroll expenses in the short term, in the long term it often generates substantial indirect costs. Employee turnover remains one of the most expensive HR challenges. Replacing an experienced specialist can cost an organization between 50 and 200 percent of their annual salary when recruitment, onboarding, training, and lost productivity are taken into account.

Beyond financial implications, dry promotions negatively affect organizational culture, diminish trust in leadership, and foster cynicism and disengagement. When employees observe that increased responsibility is not fairly compensated, they begin to question the organization’s stated values. Over time, this weakens engagement, creativity, and innovation.

Conclusion

The dry promotion phenomenon in human resource management highlights a fundamental tension between organizations’ desire to control costs and employees’ expectation of fair compensation for increased contributions. Although granting a higher title without a salary increase may appear to be a pragmatic short term solution, empirical data and practical observations suggest that in the long term this practice more often produces negative than positive outcomes, both in terms of employee motivation and organizational sustainability.

Therefore, within the HR management context, it is increasingly important not only to formally recognize employee efforts but also to ensure that career growth is accompanied by real, proportional, and transparently communicated compensation. This ultimately determines long term trust, loyalty, and an organization’s ability to retain talent.

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