Promotion refers to upward movement of employees from the current job to another that is higher in pay, responsibility and /or organizational level. A promotion brings enhanced status. Better pay, increased responsibilities and better working conditions to the promotee. There can of course be dry promotions where a person is moved to a higher level job without increase in pay. Promotion is slightly different from up-graduation which means elevating the place of the job in the organizational hierarchy (a better title is given now) or including the job in higher grade (minor enactment in pay in tune with the limits imposed with a particular grade). A transfer implies horizontal movement of an employee to another job at the same level . There is no increase in pay authority or status. . Hence it cannot act as a motivational tool. Promotion on the other hand, has in built motivational value as it elevates the status and power of an employee within an organization.

Purposes and advantages of Promotion:

Promotion based either on meritorious performance or continuous services, has powerful motivational value. It forces an employee to use knowledge skills, and abilities fully and become eligible for vertical growth. It inspires employees to compete and get ahead of others. Those who fall behind in the race are also motivated to acquire the required skills to be in the reckoning. Promotion, thus paves the way for employees’ self development. It encourages them to remain loyal and committed to their jobs and the organization. The organization would also benefit immensely because people are ready to assume challenging roles by improving their skills constantly. Interest in interning and development programs would improve. The organizations would be able to utilize the skills and abilities of its personnel more effectively.

Bases of promotion:

Organizations adopt different bases of promotion depending upon their nature, size, management etc. Generally they may combine two or more bases of promotion. The well established bases of promotion are seniority and merit.

Merit based promotions:

Merit based promotions occur when an employee is promoted because of superior performance in the current job. Merit here denotes an individual’s knowledge skills, abilities, and efficiency as measured from the educational qualifications, experience, training and past, employment record. The advantages of this system are fairly obvious:

1)It motivates employees to work hard, improve their knowledge acquire new skills and contribute to organizational efficiency.
2) it helps the employer to focus attention on talented people, recognize and reward their meritorious contribution in an appropriate way.
3) It also inspires other employees to improve their standards of performance through active participation in all developmental initiatives undertaken by the employer ( training executive developments etc).

However the system may fail to deliver the results because:

1) it is not easy to measure merit. Personal prejudices biases, and union pressures may come in the way of promoting the best performer.
2) When young employees get ahead of other senior employees in an organization (based on superior performance) frustration and discontentment may spread among the ranks. They may feel insecure and may even quit the organization
3) Also, past performance may not guarantee future success of an employee . Good performances in one job (a Foremen for example) is no guarantee of good performances in another (as a supervisor).

Seniority based promotions: Seniority refers to the relative length of service in the same organization. Promoting an employee who has the longest length of services is often widely welcomed by unions because it is fairly objective. It is easy to measure the length of service and judge the seniority. There is scope for favoritism discrimination and subjective judgment. Everyone is sure of getting the same, one day.

Source: HRM