Promotion and salary revision policy: criteria, cycles, bands and appeals

Ask a team why a colleague was promoted and you will often hear a version of: the manager liked her. In many companies that is partly true, because nobody wrote down what the next level looks like. A promotion and salary revision policy replaces that guesswork with levels, criteria, a calendar and an appeal.

The policy sets out fair career progression and a regular review of pay. It covers all confirmed employees. Say what applies during probation, and state whether trainees move on a separate path. Leadership roles may follow the same cycle with approval by the board or owners.

• Grade or level: a rung on the career ladder, with a title and expectations.
• Band: the pay range for a level, with a lower point, a midpoint and an upper point.
• Increment: a revision to pay within the same level.
• Promotion: a move to a higher level, with a change in responsibility and pay.
• Off-cycle revision: a change made outside the annual window, for retention or market correction.

Begin with job grades. For each grade, write what the person is expected to do alone, what they influence and what they lead. Add technical competencies for the craft and behavioural ones such as ownership and communication. People management expectations belong in a separate track, so excellent individual contributors can progress without managing others.

Use internal opportunities as part of the policy. Post open roles inside the company first, state who may apply and keep applicants' interest confidential from their current manager until the shortlist stage, if you choose that approach.

• Review frequency: once a year, twice a year, or a main cycle with a promotion-only mid-year window.
• Salary bands: how wide, how often updated and whether they are shown to employees.
• Promotion criteria: sustained performance at the current level, demonstrated competencies at the next and an available role. Decide whether a vacancy is required.
• Budget: a total revision pool set by leadership, divided across departments by a stated rule.
• Approval authorities: manager, department head, HR head and owners, by size of change.

Market benchmarking helps set the bands. It compares your pay with what similar companies pay for similar roles. Use it to place bands, not to promise a figure to individuals.

1. 1

   Cycle opens

   HR announces the calendar, budget pool and forms to all managers.

2. 2

   Nomination

   Managers nominate employees for promotion or an increment, with evidence from the appraisal and project records.

3. 3

   Manager recommendation

   The manager proposes the outcome and writes a short rationale against the criteria.

4. 4

   Calibration

   HR and department heads meet to compare recommendations, test them against bands and budget, and resolve inconsistencies.

5. 5

   Approval

   The designated authority approves the final list. Anything above the pool needs a leadership decision.

6. 6

   Communication

   Managers hold the conversation, HR issues the letter and revised pay breakdown, and the employee acknowledges receipt.

7. 7

   Record

   HR updates the grade and pay record and files the decision note in the restricted personnel file.

Performance-based increments need a rule, such as a grid that links appraisal rating and position in band to a percentage you configure. A person already at the top of the band may receive a one-time payment instead of a base rise. State this so it is not a surprise. When a promotion changes pay, decide whether the person moves to the minimum of the new band or receives a set uplift, whichever is higher.

Prepare a promotion packet for each nomination: the latest appraisal summaries, a list of projects led, peer feedback and the manager's one-page case. Run a calibration meeting with a fixed agenda, starting with the top and bottom of the ratings, then the borderline cases and the pay compression cases, where a new hire earns close to a senior colleague. Track an equity check on gender, tenure and team so patterns show before letters go out. A promotion committee of three, with one member outside the nominating department, keeps the process honest.

Watch for the awkward cases. Pay compression between a lateral hire and a long-serving colleague, an acting-up allowance for someone covering a vacant lead role, a title upgrade with no pay change, a spot award mistaken for an increment, and a retention grant offered to one engineer after a competitor poaches. Give each a named treatment, an owner and a sunset date, and record the reasoning in the revision register.

Off-cycle revisions should be rare and need a written reason and approval one level above the usual authority. Common reasons are a counter-offer, a sharp market shift or a major expansion in role. Decide how you will protect fairness for peers who do not get an off-cycle increase.

Communicate in person first, then in writing. Explain the reason and what would make the next outcome different. Salary information is confidential; ask employees not to compare figures and keep the files restricted to HR and the approvers. An employee who disagrees may appeal in writing within [number] days to a reviewer who was not in the original decision. Record the outcome and give a written answer.

Review the policy yearly, before the cycle opens, and re-issue it with a version number and acknowledgement.

1. Aim and reach: [confirmed employees]; trainees follow [separate path].
2. Levels and bands: grade descriptions and pay ranges as set out in Schedule A.
3. Review cycle: annual, opening in [month]; effective date [date].
4. Promotion criteria: sustained performance, next-level competencies, role availability.
5. Increments: linked to rating and band position using the grid in Schedule B.
6. Budget and approvals: pool set by [role]; authority limits as per Schedule C.
7. Off-cycle revisions: written reason, approval by [role].
8. Communication: manager conversation and HR letter within [number] days of approval.
9. Appeals: written request within [number] days; reviewed by [role].
10. Confidentiality: decision files restricted to HR and approvers; employee signs receipt of the letter, edition [x].

Benchmarking and band design are part of compensation benchmarking, alongside the other documents listed under HR policies and governance. This policy depends on performance appraisal goals and ratings, connects to incentives and bonuses and feeds salary and payroll. Sequencing matters too, and the 30-policy overview.