2018-01-26 00:00:00 Managing People English Choose the right employee for promotion in your small business based on performance, experience, and skill set. Learn what qualities to... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Employee-Excited-About-Recent-Promotion.jpg https://quickbooks.intuit.com/ca/resources/managing-people/employee-promotions-small-business/ Employee Promotions in a Small Business

Employee Promotions in a Small Business

4 min read

If performing daily duties to run your small business becomes too time consuming for you to tackle alone, consider promoting an employee to handle some of the more important responsibilities. Deciding to promote from within offers several advantages, such as cheaper costs, easier transitions, and improved recruitment. Whether you promote an employee based on competitive or noncompetitive standards, you must develop a consistent way to evaluate employees competing for a promotion. Competitive promotions include tests for skill level, application submission, interviewing, and performance evaluation. Noncompetitive promotions are generally offered after an employee reaches a specific milestone.

Qualities for Promotion

An employee who is ready for a promotion should display certain qualities. Employees who actively seek more responsibility or volunteer to complete additional tasks are ideal candidates for promotion. Pay attention to employees who rarely come up with excuses, as well as those who do what it takes to get the job done without additional incentives. These types of employees create solutions rather than problems, which helps them handle the demands of accepting more responsibility. When deciding to promote, look for an employee who is respected by other employees and offers support and guidance without being told to do so. These factors make the transition easier and help boost workplace morale and harmony.

Choosing an employee who is a team player helps keep other employees on the same page, as this employee inspires collaboration, not competition. A good candidate should display natural leadership skills and take charge when needed, but actively listen to other employees’ ideas when solving problems. Promoting an employee who manages stress well is also important. With more responsibility comes higher levels of conflict, increased demand, and decreased support from peers. Employees deserving a promotion should display the potential to work well under this type of stress.


For a small business, performance-based promotions and merit-based promotions are the best ways to promote employees. Performance-based promotions take into account how well the employee completes assigned work and how well they perform when compared to other employees. This type of promotion can include sales numbers or the employee’s ability to meet or exceed quotas. Performance-based promotions are usually evaluated over a specific period of time typically ranging from a six-month period to yearly evaluations. Observing the employee’s accountability among other employees gives you an idea of the best candidate to accept more responsibility.

A basic checklist for promotion should include characteristics such as:

  • Exceeds customer service expectations
  • Consistently meets or exceeds sales goals
  • Works comfortably with co-workers
  • Demonstrates leadership potential
  • Learns new practices quickly

Employees who are ready for promotion are committed to their work, have mastered their tasks, and actively look to help other employees. They also manage their time well and volunteer for leadership roles.

Awarding the Promotion

After you’ve completed performance evaluations or the employee has reached an annual milestone, you should award the employee with their promotion. Depending on the size of your business, you can call a meeting for all employees to make the announcement, or you can simply tell the employee in your office. When awarding the promotion, be clear why this employee was selected. This gives other employees a clear understanding of what it takes to earn a promotion and establishes your expectations for advancement. Whether you chose to give the employee a custom pin or exclusive parking space, you should offer a reward. Aside from the pay raise or additional privileges, a small gesture gives the employee a daily reminder that your business appreciates their effort. This gesture also motivates other employees to work harder to receive the same reward or status.

Once your employee accepts the promotion, try to make their transition as easy as possible. Promoting from within provides an easier transition, as the employee already knows the in and outs of the business. The employee is also familiar with other employees in various departments and understands your specific workplace practices. Training the employee in this new position helps create a straightforward understanding of duties or responsibilities. Training also shows the employee how you want the work completed, creating a seamless transition when they take over duties unsupervised.

Pay Raises

If you decide to offer a promotion without a pay increase, your employee still receives the message that you are acknowledging their effort and are advancing their career. When you offer a pay raise for a promotion, be sure to account for the market range of the position, then adjust the raise for the employee’s individual experience, skill set, and performance. Although additional responsibilities may require a raise in pay, you should base the increase on the employee’s performance review. Whether you decide to give a modest increase or a considerable raise, provide a consistent interval to give your employees a clear idea of what to expect with a promotion.

Handle Rejections

When an employee rejects the opportunity for a promotion, you should ask questions to uncover the reason for the rejection. Whether the employees rejects the position because of personal reasons or career-related reasons, continue to treat the employee with courtesy and professionalism. You should not prevent the employee from future promotion opportunities as a result of the rejection, as it is important to continue showing the employee you value their hard work and contribution to your business. After the rejection, speak with another qualified candidate on your list. Using the same performance evaluations and checklist, select the next-best employee to fill the position as quickly as possible.

Promoting employees from within helps create an easier transition, and selecting an employee internally allows you to choose an employee who already knows your business. When promoting, base your decision on performance and skill set to select an employee who can handle additional responsibilities and the demand that comes with them.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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