The evolving promotion system

HAN AE-RANIt's the season for promotions. Without exception, companies announce their promotion lists around this time of the year. As you skim over who made the list, your heart goes out to those not included. If someone is..

HAN AE-RAN The author is the head of S Team at the JoongAng Ilbo.

It’s the season for promotions. Without exception, companies announce their promotion lists around this time of the year. As you skim over who made the list, your heart goes out to those not included. If someone is promoted, it means someone left the position, and at the same time, it means someone who hoped to be promoted didn’t make it.

“How can I not be promoted despite all the contracts I won this year? The company is crazy,” complained a deputy team leader at a major company. He showed the best performance at his company, but because of the internal corporate dynamics, all members of his team were not promoted.

A team leader who failed to get promoted to an executive position said, “As I make the candidate list every year, I feel numb.” As people around him also expected him to be promoted, they questioned why he didn’t make the list despite his remarkable performance.

The purpose of a promotion system is to motivate employees to perform well with rewards. But in companies whose rewards for positions are larger than other companies, the promotion itself becomes a goal. The competition gets more intense if internal politics play a more critical role in promotion rather than performance.

In this case, individuals do not need to take a risk and challenge big projects. It is best to manage their career by taking a stable project and focusing on networking while staying on people’s good side. Under such circumstances, there is no place for creative thinking. Safi Bahcall wrote in his book “Loonshots” (2019) that the wrong incentives can ruin organizations and that companies must offer incentives based on outcomes rather than offering incentives aimed at fueling competition for promotion among employees.

How about eliminating positions based on hierarchy? “Loonshots” discusses the case of the U.S. Defense Advanced Research Projects Agency, an example of legendary “crazy ideas.” Because there is no promotion ladder, there is no reason to spend time on internal politics. There is no need to find faults in the crazy “loonshots” of coworkers. Here, the reward for accomplishment is not promotion but recognition from colleagues.

Is it hard to generalize this very unique case? SK Innovation recently decided to eliminate hierarchy-based positions. The positions of staff, associate, desk leader and team leader have been unified under professional manager. The promotion system to team leader was eliminated. The company explained that it was to create an environment where free ideas can be expressed. I anticipate the outcome of this experiment will nurture loonshots in Korea, too.