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I've been tasked with handling promotions for a team of software engineers and I'm struggling to find information on best practices for raises tied to promotions.

For some background, we give a standard 3-5% increase yearly, based on a performance review.

Given a promotion at the time of the review from junior software engineer to mid level, or mid level to senior, for example, is it common to increase the standard raise? If so, by how much?

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  • @JoeStrazzere Yes I am the manager. This is my first management job, I have not handled raises before. There are no guidelines, it's a small/growing company and I've been tasked with defining the process. There is a small HR department but again, it has been determined that I'm the person to handle this.
    – user112693
    Dec 11, 2019 at 18:33

3 Answers 3

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You asked,

is it common to increase the standard raise?

Yes - it's fair to say that people generally expect an increase when they get a promotion, in addition to any increase that is given annually (typically for "expected" growth and/or cost of living increases).

If so, by how much?

It may be helpful to step back and determine how your employer determined the salaries employees are already paid. Hopefully, that was done by essentially pricing out the job description - in other words, determining the market rate for the work that's being accomplished. Although, for some employers, it may have been much less intentional than that. But at the end of the day, pay is usually tied to the responsibilities of the position.

Understanding that gives you a default process by which you can answer your own question. If you have a team of people with Junior title, and you're wondering what the pay them once they're promoted to Middle or Senior titles, you first need to determine what the differences in responsibility, skills, and expectations are. Then, you can just iterate your original process. We can't tell you if a Senior is worth 5% more or 50% more than a Middle title, but you can determine that once you have a documented job description for both, and are able to quantify the differences.

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tl;dr - it depends.

More responsibility should bring with it greater rewards (usually salary, but possibly one-off bonuses and/or other perks) and your employees will certainly expect that to be the case. How much, though, depends on a lot of factors - the company budget, keeping salaries reasonably consistent with colleagues performing at the same level, keeping salaries reasonably consistent with competitors' offerings, and meeting past promises. We don't know the details and therefore can't give you a meaningful figure.

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  • fair enough, but I think many of those additional factors can be implied or removed. I did not add a budget constraint and can assume salaries are relatively consistent among employees at same level, no special promises, etc
    – user112693
    Dec 11, 2019 at 18:19
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Given a promotion at the time of the review from junior software engineer to mid level, or mid level to senior, for example, is it common to increase the standard raise? If so, by how much?

What does it cost to hire someone off the street? I'd argue they're worth exactly that, and any raise associated with a promotion should be to what they're worth.

It's always more expensive to recruit than to promote. The company will save money if they can pay average or better and promote internally. You don't have to waste time on-boarding, and you don't have to waste time recruiting.

If you don't pay them what they're worth, they'll find someone else who will.

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  • I know what you're saying, but I'd say an employee already in the job is actually worth more than someone recruited off the street. The employee will already be familiar with projects, stakeholders, business processes, have internal relationships, and they're a known quantity. Alas industry rarely seems to value employees in this way.
    – fubar
    Dec 11, 2019 at 23:55
  • Oh I agree, that's what I meant by "what does it cost to hire someone off the street." That should be a bare minimum. Employers often see people as interchangeable cogs, and treat them as such. I would assume that those that don't are generally more successful, but I'm also sure such a thing has never been studied at the risk of correcting the productivity to salary curve that flatlined three decades ago.
    – user29234
    Dec 11, 2019 at 23:58

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